Table of expanding into new markets and selectively developing company-owned or managed clinics exposes us to risks, including limiting our ability to develop or acquire clinics and limiting our financial flexibility.Contents

If we do not have sufficient cash resources, our ability to develop and acquire clinics could be limited unless we are able to obtain additional capital through future debt or equity financing. Using cash to finance development and acquisition of clinics could limit our financial flexibility by reducing cash available for operating purposes. Using debt financing could result in lenders imposing financial covenants that limit our operations and financial flexibility. Using equity financing may result in dilution of ownership interests of our existing stockholders. We may also use common stock as consideration for the future acquisition of clinics. If our common stock does not maintain a sufficient market value or if prospective acquisition candidates are unwilling to accept our common stock as part of the consideration for the sale of their clinics or businesses, we may be required to use more of our cash resources or greater debt financing to complete these acquisitions.

Our marketing programs may not be successful.

We incur costs and expend other resources in our marketing efforts to attract and retain patients. Our marketing activities are principally focused on increasing brand awareness and driving patient volumes. As we open new clinics, we undertake aggressive marketing campaigns to increase community awareness about our growing presence. We plan to continue to utilize targeted marketing efforts within local neighborhoods through channels such as radio, digital media, community sponsorships

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and events, and a robust online/social media presence. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenue. Our ability to market our services may be restricted or limited by federal or state law.

We will be subject to risks associated with leasing space subject to long-term non-cancelable leases for clinics that we intend to operate.

We do not own, and we do not intend to own, any of the real property where our company-owned or managed clinics operate. ~~We expect the spaces for the company-owned or managed clinics we intend to open in the future will be leased.~~ We anticipate that our leases generally will have an initial term of five or ten years and generally can be extended only in five-year increments (at increased rates). We expect that all of our leases will require a fixed annual rent, although some may require the payment of additional rent if clinic sales exceed a negotiated amount. We expect that our leases will typically be net leases, which require us to pay all of the costs of insurance, taxes, maintenance and utilities, and that these leases will not be cancellable by us. If a future company-owned or managed clinic is not profitable, resulting in its closure, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, we may fail to negotiate renewals as each of our leases expires, either on commercially acceptable terms or at all, which could cause us to pay increased occupancy costs or to close clinics in desirable locations. These potential increases in occupancy costs and the cost of closing company-owned or managed clinics could materially adversely affect our business, financial condition or results of operations.

The COVID-19 pandemic has caused significant disruption to our operations in the past and may continue to impact our business, key financial and operating metrics, and results of operations in numerous ways that may be unpredictable. A future widespread outbreak of contagious disease could similarly disrupt our business.

~~There continues to be uncertainty around the COVID-19 pandemic as the variants have caused periodic increases in COVID-19 cases globally in the past.~~The pandemic has, at times, negatively impacted our revenue and earnings, and the extent to which the pandemic will impact our business in the future remains uncertain. It will depend on factors such as the duration of the pandemic, the response of national, state and local governments (which could include the reinstatement of restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns), the impact of existing and new Covid variants, the vaccination rates among the population, the efficacy of the COVID-19 vaccines against existing and new Covid variants, and the longer-term impact of the pandemic on the economy and consumer behavior. Any or all of these factors could continue to affect patient behavior and spending levels and result in reduced visits and patient spending trends. The pandemic retains the potential to further disrupt our business and to continue to cause volatility in the financial markets, which could adversely impact our financial position, results of operations and the market price of our stock.A future epidemic, pandemic or other widespread outbreak of contagious disease in any geographic area in which we operate could result in a health crisis adversely affecting the economies and demand for our services in such areas.

Changes in economic conditions and adverse weather and other unforeseen conditions could materially affect our ability to maintain or increase sales at our clinics or open new clinics.

Our services emphasize maintenance therapy, which is generally not a medical necessity, and should be viewed as a discretionary medical expenditure. The United States in general or the specific markets in which we operate may suffer from depressed economic activity, recessionary economic cycles, higher fuel or energy costs, low consumer confidence, high levels of unemployment, reduced home values, increases in home foreclosures, investment losses, personal bankruptcies, reduced access to credit or other economic factors that may affect consumer discretionary spending. As noted in a previous risk factor, the current period of high inflation, which is expected to persist through at least ~~2023,~~2024, is likely to reduce consumer discretionary spending. Traffic in our clinics could decline if consumers choose to reduce the amount they spend on non-critical medical procedures. Negative economic conditions might cause consumers to make long-term changes to their discretionary spending behavior, including reducing medical discretionary spending on a permanent basis. In addition, given our geographic concentrations in the West, Southwest, Southeast, and mid-Atlantic regions of the United States, economic conditions in those particular areas of the country could have a disproportionate impact on our overall results of operations, and regional occurrences such as local strikes, terrorist attacks, increases in energy prices, adverse weather conditions, tornadoes, earthquakes, hurricanes, floods, droughts, fires or other natural or man-made disasters could materially adversely affect our business, financial condition and results of operations. All of our clinics depend on visibility and walk-in traffic, and the effects of adverse weather may decrease visits to malls in which our clinics are located and negatively impact our revenues. If clinic sales decrease, our profitability could decline as we spread fixed costs across a lower level of revenues. Reductions in staff levels, asset impairment charges and potential clinic closures could result from prolonged negative clinic sales, which could materially adversely affect our business, financial condition and results of operations.

RISKS RELATED TO USE OF THE FRANCHISE BUSINESS MODEL

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Our dependence on the success of our franchisees exposes us to risks including the loss of royalty revenue and harm to our brand.

A substantial portion of our revenues comes from royalties generated by our franchised clinics, which royalties are based on the revenues generated by those clinics. We anticipate that franchise royalties will represent a substantial part of our revenues in the future. As of December 31, ~~2022,~~2023, we had franchisees operating or managing ~~712~~800 clinics. We rely on the performance of our franchisees in successfully opening and operating their clinics and paying royalties and other fees to us on a timely basis. Our franchise system subjects us to a number of risks as described here and in the next four risk factors. These risks include a significant further decline in our franchisees’ revenue, which occurred in 2020 as a result of the COVID-19 pandemic. Furthermore, in 2020, we took additional actions to support our franchisees that experienced challenges during the COVID-19 pandemic, further reducing our royalty revenues and other fees from franchisees. In 2020, for a period of time, we waived

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minimum royalty requirements, monthly software fees for clinics forced to close temporarily due to the pandemic, and minimum required marketing expenditures. We may need to re-implement, expand or extend these accommodations to franchisees, further reducing our revenues from franchised clinics and reducing the visibility of “The Joint” brand in the marketplace. Any new or re-implemented accommodations and the occurrence of any of the other events described here and in the next four risk factors could impact our ability to collect royalty payments from our franchisees, harm the goodwill associated with our brand, and materially adversely affect our business and results of operations.

Our franchisees are independent operators over whom we have limited control.

Franchisees are independent operators, and their employees are not our employees. Accordingly, their actions are outside of our control. Although we have developed criteria to evaluate and screen prospective franchisees, we cannot be certain that our franchisees will have the business acumen or financial resources necessary to operate successful franchises in their approved locations, and state franchise laws may limit our ability to terminate or modify these franchise agreements. Moreover, despite our training, support and monitoring, franchisees may not successfully operate clinics in a manner consistent with our standards and requirements, or may not hire and adequately train qualified personnel. The failure of our franchisees to operate their franchises successfully and the actions taken by their employees could have a material adverse effect on our reputation, our brand and our ability to attract prospective franchisees, and on our business, financial condition and results of operations.

We are subject to the risk that our franchise agreements may be terminated or not renewed.

Each franchise agreement is subject to termination by us as the franchisor in the event of a default, generally after expiration of applicable cure periods, although under certain circumstances a franchise agreement may be terminated by us upon notice without an opportunity to cure. The default provisions under the franchise agreements are drafted broadly and include, among other things, any failure to meet operating standards and actions that may threaten our intellectual property. In addition, each franchise agreement has an expiration date. Upon the expiration of the franchise agreement, we or the franchisee may, or may not, elect to renew the franchise agreement. If the franchise agreement is renewed, the franchisee will receive a new franchise agreement for an additional term. Such option, however, is contingent on the franchisee’s execution of the then- current form of franchise agreement (which may include increased royalty payments, advertising fees and other costs) and the payment of a renewal fee. If a franchisee is unable or unwilling to satisfy any of the foregoing conditions, we may elect not to renew the expiring franchise agreement, in which event the franchise agreement will terminate upon expiration of its term. The termination or non-renewal of a franchise agreement could result in the reduction of royalty payments we receive.

Our franchisees may not meet timetables for opening their clinics, which could reduce the royalties we receive.

Our franchise agreements specify a timetable for opening the clinic. Failure by our franchisees to open their clinics within the specified time limit would result in the reduction of royalty payments we would have otherwise received and could result in the termination of the franchise agreement. As of December 31, ~~2022,~~2023, we had active licenses and letters-of-intent for ~~235~~172 clinics which we believe to be developable within the specified time periods, but we cannot be certain of this.

Our regional developers are independent operators over whom we have limited control.

Our regional developers are independent operators. Accordingly, their actions are outside of our control. We depend upon our regional developers to sell a minimum number of franchises within their territories and to assist the purchasers of those franchises to develop and operate their clinics. The failure by regional developers to sell the specified minimum number of franchises within the time limits set forth in their regional developer license agreements would reduce the franchise fees we would otherwise receive, delay the payment of royalties to us and result in a potential event of default under the regional developer license agreement. Of our total of 1817 regional developers as of December 31, ~~2022,~~2023, three had not met their minimum franchise sales requirements within the time periods specified in their regional developer agreements.

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FINANCIAL RISK FACTORS

Our level of debt could impair our financial condition and ability to operate.

~~In 2020, in order to increase our cash position and preserve financial flexibility in responding to the impacts~~As of ~~the COVID-19 pandemic on our business,~~December 31, 2023, we ~~drew down~~had drawn $2.0 million under the Credit ~~Agreement.~~Agreement (defined at Note 7, Debt). Our level of debt could have important consequences to investors, including:

•requiring a portion of our cash flows from operations be used for the payment of interest on our debt, thereby reducing the funds available to us for our operations or other capital needs;

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•limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate because our available cash flow, after paying principal and interest on our debt, may not be sufficient to make the capital and other expenditures necessary to address these changes;

•increasing our vulnerability to general adverse economic and industry conditions, since we will be required to devote a proportion of our cash flow to paying principal and interest on our debt during periods in which we experience lower earnings and cash flow;

•limiting our ability to obtain additional financing in the future to fund working capital, capital expenditures, acquisitions, and general corporate requirements; and

•placing us at a competitive disadvantage to other relatively less leveraged competitors that have more cash flow available to fund working capital, capital expenditures, acquisitions, and general corporate requirements.

We ~~have~~previously identified material weaknesses in our internal control over financial reporting. If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results, prevent fraud, or maintain investor confidence.

We are subject to the internal control requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which require management to assess the effectiveness of our internal control over financial reporting. ~~Our~~Furthermore, our independent registered public accounting firm ~~will not be~~is now required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404, since as of December 31, ~~2022,~~2023, we became ~~a non-accelerated~~an accelerated filer.

Internal controls related to the operation of financial reporting and accounting systems are critical to maintaining adequate internal control over financial reporting. As discussed in Part II, Item 9A of this ~~report,~~Form 10-K, our management previously concluded that our internal controls over financial reporting were not effective as of December 31, 2022 due to material weaknesses in internal controls related to (i) the accounting treatment in significant complex areas, and (ii) the identification of uncertain tax positions. We did not design and maintain effective controls over the accounting of complex areas, including accounting for revenue recognition and ~~asset acquisition transactions and~~ we did not design and maintain effective controls over the identification of uncertain tax positions. ~~We have undertaken, and will continue to implement,~~

During 2023, management implemented our previously disclosed remediation ~~measures~~plan that included modifying internal controls to address ~~these~~completeness of documentation on uncertain tax positions, revenue and acquisition related transactions over adoptions of the appropriate respective accounting standards, specifically through the utilization of subject matter experts to review conclusions over complex accounting policies.

During the fourth quarter of 2023, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective. As a result, we have concluded the material weaknesses ~~which measures will result in additional resource and other compliance expenses. We expect that our remediation plan will be completed prior to the end~~have been remediated as of fiscal year 2023; however, these weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We cannot provide assurances that these material weaknesses will be effectively remediated.December 31, 2023.

We previously reported in our Annual Report on Form 10-K as of December 31, 2021 material weaknesses in internal control that have since been remediated, except those internal controls related to complex accounting areas. Specifically, these material weaknesses related to: (i) risk assessment and scoping - we did not effectively design and maintain controls in response to the risks of material misstatement. Specifically, the design of existing controls or the implementation of new controls has not been sufficient to respond to the risks of material misstatement related to the incremental borrowing rate for our leases, deferred costs and related expenses, other revenues, breakage revenue, intangible asset amortization, determination of reporting units, reassessment of our VIEs, stock option exercises, and the accuracy and completeness of certain financial statements; (ii) segregation of duties - we did not design and maintain effective controls such that all accounting duties are sufficiently segregated within our business processes and certain financial applications. Specifically, we failed to have the appropriate ~~Company~~ personnel monitor users with administrative access to certain financial applications and data, and we did not design and maintain effective controls such that all accounting duties are sufficiently segregated; (iii) accounting related to significant complex accounting areas - we did not design and maintain effective controls over the accounting of complex accounting areas, including taxes and business combination and asset acquisition transactions Specifically, we failed to properly design controls to appropriately determine the proper accounting treatment for certain revenue streams and leases. During 2022, we completed

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the remediation measures related to the material weakness described in this paragraph. Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly.

If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods

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could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

Internal controls related to the operation of financial reporting and accounting systems are critical to maintaining adequate internal control over financial reporting. We cannot provide any assurance that additional material weaknesses will not occur in the future.

Our balance sheet includes intangible assets and goodwill. A decline in the estimated fair value of an intangible asset or a reporting unit could result in an impairment charge recorded in our operating results, which could be material.

Goodwill is tested for impairment annually and between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Also, we review our amortizable intangible assets for impairment if an event occurs or circumstances change that would indicate the carrying amount may not be recoverable. If the carrying amount of our goodwill or another intangible asset were to exceed its fair value, the asset would be written down to its fair value, with the impairment charge recognized as a noncash expense in our operating results. Adverse changes in future market conditions or weaker operating results compared to our expectations ~~including, for example, as a result of the pandemic,~~ may impact our projected cash flows and estimates of weighted average cost of capital, which could result in a potentially material impairment charge if we are unable to recover the carrying value of our goodwill and other intangible assets.

Our balance sheet includes a significant number of long-lived assets in our corporate clinics, including operating lease right-of-use assets and property, plant and equipment. A decline in the current and projected cash flows in our corporate clinics could result in impairment charges, which could be material.

Long-lived assets, such as operating lease right-of-use ("ROU") assets and property, plant and equipment in our corporate clinics, are tested for impairment if an event occurs or circumstances change that would indicate the carrying amount may not be recoverable. If the carrying amount of a long-lived asset were to exceed its fair value, the asset would be written down to its fair value and an impairment charge recognized as a noncash expense in our operating results. Adverse changes in future market conditions or weaker operating results compared to our expectations ~~including, for example, as a result of the pandemic,~~ may impact our projected cash flows and estimates of weighted average cost of capital, which could result in a potentially material impairment charge if we are unable to recover the carrying value of our long-lived assets.

Our increased reliance on sources of revenue other than from ~~franchise licenses~~company-owned or managed clinics exposes us to risks including the loss of revenue and reduction of working capital.

From the commencement of our operations until we began to acquire or open company-owned or managed clinics, we relied exclusively on the sale of franchises licenses as a source of revenue until the franchises we sold began to generate royalty revenues.

As our portfolio of company-owned or managed clinics ~~matures,~~has matured, we have placed ~~less~~more reliance on ~~these franchise sources of revenue.~~revenues from company-owned or managed clinics. As we ~~develop further~~execute on our re-franchising strategy, we will place a greater reliance on revenue from franchise fees and royalties. As company-owned or managed clinics weare sold to franchisees, the total amount of revenue will decrease. In addition, the length of time to complete the re-franchising efforts could be ~~required to use our working capital to operate our business. If the opening~~in excess of our ~~company-owned or managed clinics is delayed or if the cost~~current expectations, and result in increased levels of ~~developing company-owned or managed clinics exceeds our expectations, we~~general and administrative expenses for longer than anticipated. We may experience insufficient working capital to fully implement our ~~development~~growth plans, and our business, financial condition and results of operations could be adversely affected.

We have experienced net losses and may not achieve or sustain profitability in the future.

We have experienced periods of net losses in the past, and while we have achieved profitability since 2018, our revenue may not grow and we may not maintain profitability in the future. Our ability to maintain profitability will be affected by the other risks and uncertainties described in this section and in Management’s Discussion and Analysis. If we are not able to sustain or increase profitability, our business will be materially adversely affected and the price of our common stock may decline.

Any audit by the IRS with respect to our receipt of an employee retention credit (“ERC”) under The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act could result in additional taxes or costs to ~~the Company.~~our company.

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We ~~recently~~ received ~~notice that we will be receiving~~ an ERC pursuant to the CARES ACT. Please see Note ~~15, “Subsequent Events”~~12, “Employee Retention Credit” in the Notes to the consolidated financial statements included in Item 8 of this ~~report~~Form 10-K for a description of the ERC. ~~The Company’s~~Our eligibility to receive the ERC remains subject to audit by the IRS for a period of five years. If the IRS audits ~~the Company~~us during that time, it may find that ~~the Company was~~we were not eligible to receive some or all of the ERC, in which case we would be required to return some or all of the ERC to the IRS. Additionally, 20% of the ERC will be paid to an outside third party as a consulting fee. In the event we are required to return some or all of the ERC, we may not be able to recoup the consulting fee.

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RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITION

Our clinics and chiropractors compete for patients in a highly competitive environment that may make it more difficult to increase patient volumes and revenues.

The business of providing chiropractic services is highly competitive in each of the markets in which our clinics operate. The primary bases of such competition are quality of care, reputation, price of services, marketing and advertising strategy implementation, convenience, traffic flow, visibility of office locations, and hours of operation. Our clinics compete with all other chiropractors in their local market. Many of those chiropractors have established practices and reputations in their markets. Some of these competitors and potential competitors may have financial resources, affiliation models, reputations or management expertise that provide them with competitive advantages over us, which may make it difficult to compete against them. Our three largest multi-unit competitors are Airrosti, which currently operates ~~158~~150 clinics; HealthSource Chiropractic, which currently operates ~~114~~131 clinics; and 100% Chiropractic, which currently operates 97125 clinics. Two of these competitors are currently operating under an insurance-based model. In addition, a number of other chiropractic franchises and chiropractic practices that are attempting to duplicate or follow our business model are currently operating in our markets and in other parts of the country and may enter our existing markets in the future.

Our success is dependent on the chiropractors who control the ~~professional corporations,~~PCs, or PC owners, with whom we enter into management services agreements, and we may have difficulty locating qualified chiropractors to replace PC owners.

In states that regulate the corporate practice of chiropractic, our chiropractic services are provided by legal entities organized under state laws as ~~professional corporations, or~~ PCs and their equivalents. Each PC employs or contracts with chiropractors in one or more offices. Each of the PCs is wholly owned by one or more licensed chiropractors, or medical professionals as state law may require, and we do not own any capital stock of any PC. We and our franchisees that are not owned by chiropractors enter into management services agreements with PCs, to provide to the PCs on an exclusive basis, all non-clinical services of the chiropractic practice. The PC owner is critical to the success of a clinic because he or she has control of all clinical aspects of the practice of chiropractic and the provision of chiropractic services. Upon the departure of a PC owner, we may not be able to locate one or more suitably qualified licensed chiropractors to hold the ownership interest in the PC and maintain the success of the departing PC owner.

RISKS RELATED TO STATE REGULATION OF THE CORPORATE PRACTICE OF CHIROPRACTIC

Our management services agreements, under which we provide non-clinical services to affiliated PCs, could be challenged by a state or chiropractor under laws regulating the practice of chiropractic. Some state chiropractic boards have made inquiries concerning our business model or have proposed or adopted changes to their rules that could be interpreted to pose a threat to our business model.

The laws of every state in which we operate contain restrictions on the practice of chiropractic and control over the provision of chiropractic services. The laws of many states where we operate permit a chiropractor to conduct a chiropractic practice only as an individual, a member of a partnership or an employee of a PC, limited liability company or limited liability partnership. These laws typically prohibit chiropractors from splitting fees with non-chiropractors and prohibit non-chiropractic entities, such as chiropractic management services organizations, from owning or operating chiropractic clinics or engaging in the practice of chiropractic and from employing chiropractors. The specific restrictions against the corporate practice of chiropractic, as well as the interpretation of those restrictions by state regulatory authorities, vary from state to state. However, the restrictions are generally designed to prohibit a non-chiropractic entity from controlling or directing clinical care decision-making, engaging chiropractors to practice chiropractic or sharing professional fees. The form of management agreement that we utilize, and that we recommend to our franchisees that are management service organizations, explicitly prohibits the management service organization from controlling or directing clinical care decisions. However, there can be no assurance that all of our franchisees that are management service organizations will strictly follow the provisions in our recommended form of management agreement. The laws of many states also prohibit chiropractic practitioners from paying any portion of fees

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received for chiropractic services in consideration for the referral of a patient. Any challenge to our contractual relationships with our affiliated PCs by chiropractors or regulatory authorities could result in a finding that could have a material adverse effect on our operations, such as voiding one or more management services agreements. Moreover, the laws and regulatory environment may change to restrict or limit the enforceability of our management services agreements. We could be prevented from affiliating with chiropractor-owned PCs or providing comprehensive business services to them in one or more states. Please see “Part I, Item 1 - Business - Regulatory Environment - State regulations on corporate practice of chiropractic” for a description of certain of these actions by states, including state legislatures, state chiropractic regulatory bodies and a state attorney general, to regulate and restrict the corporate practice of chiropractic.

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RISKS RELATED TO OTHER LEGAL AND REGULATORY MATTERS

Proposed and expected new federal regulations under the Biden administration expanding the meaning of “joint employer” and evolving state laws increase our potential liability for employment law violations by our franchisees and the likelihood that we may be required to participate in collective bargaining with our franchisees’ employees.

Please see “Part I, Item 1 - Business - Regulatory Environment – Joint Employer Rules” for a detailed description of the background and current status of federal and state “joint employer" laws and regulations.

As discussed in the above-cited section, the proposed rules issued under the ~~National Labor Relations Act (NLRA)~~NLRA and the withdrawal of the Trump-era rules issued under the ~~Fair Labor Standards Act (FLSA)~~FLSA include or reinstate expansive definitions of “joint employer,” which could be used to deem a franchisor to be a joint employer of a franchisee’s employees. In the event of a finding of joint employer status under the NLRA, a franchisor would be required to collectively bargain or otherwise deal with a union that does not represent the franchisor’s own employees, lose the protections against union picketing of neutral employers in the event of a labor disagreement between a franchisee and a franchisee’s employees, and share in liability for labor and employment violations committed by a franchisee. Under the reversion to a more expansive definition of “joint employer” under the FLSA, a franchisor could be held jointly liable with its franchisee for minimum wages and overtime pay violations by the franchisee, depending on the extent of control and supervision the franchisor is able to exercise over the franchisee’s employees. Furthermore, there is an expectation that new rules will be issued by the ~~Equal Opportunity Employment Commission (EEOC),~~EEOC, similarly expanding “joint liability” with respect to the enforcement of anti-discrimination laws.

Such expansions of joint employer liability have implications for our business model. We could have responsibility for damages, reinstatement, back pay and penalties in connection with labor law and employment discrimination violations by our franchisees over whom we have limited control. Furthermore, it may be easier for our franchisees’ employees to organize into unions, require us to participate in collective bargaining with those employees, provide those employees and their union representatives with bargaining power to request that we have our franchisees raise wages, and make it more expensive and less profitable to operate a franchised clinic.

Similarly, state laws, such as California’s AB-5 and similar laws adopted or being considered for adoption in other states, raise concerns with respect to the expansion of joint liability to the franchise industry. While AB-5 is not a franchise-specific law and does not address joint employer liability, a significant concern exists in the franchise industry that an expansive interpretation of AB-5 or similar law could be used to hold franchisors jointly liable for the labor law violations of its franchisees. Courts addressing this issue have come to differing conclusions, and it remains uncertain as to how the joint employer issue will finally be resolved in California, although potential new federal laws or regulations may ultimately be controlling on this issue. Furthermore, there have been private lawsuits in which parties have alleged that a franchisor and its franchisee “jointly employ” the franchisee’s staff, that the franchisor is responsible for the franchisees’ staff (under theories of apparent agency, ostensible agency, or actual agency), or otherwise.

Evolving labor and employment laws, rules and regulations, and theories of liability could result in expensive litigation and potential claims against us as a franchisor for labor and employment-related and other liabilities that have historically been borne by franchisees. This could negatively impact the franchise business model, which could materially and adversely affect our business, financial condition and results of operations.

An increased regulatory focus on the establishment of fair franchise practices could increase our risk of liability in disputes with franchisees and the risk of enforcement actions and penalties.

Recently, there has been an increased focus on unfair franchise practices. A new policy from the North American Securities Administrators Association, Inc. (“NASAA”) rejects the use of required representations or waivers of claims by franchisees in

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franchise agreements for the purpose of insulating a franchisor from liability in disputes related to alleged fraud or misrepresentations during the offer and sale of a franchise. It is expected that state regulators will follow NASAA’s guidance and limit their use, as California has already done. We risk exposure to unfair trade practice claims by state regulators if we try to use a franchisee’s representations in a manner that offends NASAA’s policy. The use of such offending representations also could increase the likelihood of successful lawsuits against us by our franchisees over claims of fraud or misrepresentation. Bills also have been introduced in Congress from time to time providing for protections of franchisee rights, including certain currently pending bills seeking to establish what are described as fair franchise practices. Compliance with new, complex and changing laws may cause our expenses to increase, and non-compliance with such laws could result in penalties or enforcement actions against us. Please see “Part I, Item 1 - Business - Regulatory Environment – Regulation relating to franchising” for a description of other federal and state regulation related to franchising.

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We conduct business in a heavily regulated industry, and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations.

We, our franchisees and the chiropractor-owned PCs to which we and our franchisees provide management services are subject to extensive federal, state and local laws, rules and regulations, including: (i) federal and state laws governing the franchisor-franchisee relationship; (ii) state regulations on the practice of chiropractic; (iii) federal and state laws governing the collection, dissemination, use, security and confidentiality of sensitive personal information; (iv) federal and state laws which contain anti-kickback and fee-splitting provisions and restrictions on referrals; (v) the federal Fair Debt Collection Practices Act and similar state laws that restrict the methods that we and third-party collection companies may use to contact and seek payment from patients regarding past due accounts; and (v) federal and state labor laws, including wage and hour laws.

Many of the above laws, rules and regulations applicable to us, our franchisees and our affiliated PCs are ambiguous, have not been definitively interpreted by courts or regulatory authorities and vary from jurisdiction to jurisdiction. Accordingly, we may not be able to predict how these laws and regulations will be interpreted or applied by courts and regulatory authorities, and some of our activities could be challenged. In addition, we must consistently monitor changes in the laws and regulations that govern our operations. Furthermore, a review of our business by judicial, law enforcement or regulatory authorities could result in a determination that could adversely affect our operations. Although we have tried to structure our business and contractual relationships in compliance with these laws, rules and regulations in all material respects, if any aspect of our operations were found to violate applicable laws, rules or regulations, we could be subject to significant fines or other penalties, required to cease operations in a particular jurisdiction, prevented from commencing operations in a particular state or otherwise be required to revise the structure of our business or legal arrangements. Our efforts to comply with these laws, rules and regulations may impose significant costs and burdens, and failure to comply with these laws, rules and regulations may result in fines or other charges being imposed on us.

Our chiropractors are subject to ethical guidelines and operating standards which, if not complied with, could adversely affect our business.

The chiropractors who work in our system are subject to ethical guidelines and operating standards of professional and trade associations and private accreditation agencies. Compliance with these guidelines and standards is often required by our contracts with our chiropractors, patients and franchise owners (and their contractual relationships) and serve to maintain our reputation. The guidelines and standards governing the provision of healthcare services may change significantly in the future. New or changed guidelines or standards may materially and adversely affect our business. In addition, a review of our business by accreditation authorities could result in a determination that could adversely affect our operations.

We, along with our affiliated PCs and their chiropractors, are subject to malpractice and other similar claims and may be unable to obtain or maintain adequate insurance against these claims.

The provision of chiropractic services by chiropractors entails an inherent risk of potential malpractice and other similar claims. While we do not have responsibility for compliance by affiliated PCs and their chiropractors with regulatory and other requirements directly applicable to chiropractors, claims, suits or complaints relating to services provided at the offices of our franchisees or affiliated PCs may be asserted against us. ~~As we develop company-owned or managed clinics, our exposure to malpractice claims will increase.~~ We have experienced a number of malpractice claims since our founding in March 2010, which we have defended or are vigorously defending and do not expect their outcome to have a material adverse effect on our business, financial condition or results of operations. The assertion or outcome of these claims could result in higher administrative and legal expenses, including settlement costs or litigation damages. Our current minimum professional liability insurance coverage required for our franchisees, affiliated PCs and company-owned clinics is $1.0 million per occurrence and $3.0 million in annual aggregate. In addition, we have a corporate business owner’s policy with coverage of $2.0 million per occurrence and $4.0 million in annual aggregate. If we are unable to obtain adequate insurance, our franchisees or franchisee

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doctors fail to name ~~the Company~~our company as an additional insured party, or if there is an increase in the future cost of insurance to us and the chiropractors who provide chiropractic services or an increase in the amount we have to self-insure, there may be a material adverse effect on our business and financial results.

Events or rumors relating to our brand names or our ability to defend successfully against intellectual property infringement claims by third parties could significantly impact our business.

Recognition of our brand names, including “THE JOINT ~~CHIROPRACTIC”,~~CHIROPRACTIC,” and the association of those brands with quality, convenient and inexpensive chiropractic maintenance care, are an integral part of our business. The occurrence of any events or rumors that cause patients to no longer associate the brands with quality, convenient and inexpensive chiropractic maintenance care may materially adversely affect the value of the brand names and demand for chiropractic services at our franchisees or their affiliated PCs.

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Our ability to compete effectively depends in part upon our intellectual property rights, including but not limited to our trademarks. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property rights may not be adequate. Litigation may be necessary to enforce our intellectual property rights, or to defend against claims by third parties that the conduct of our businesses or our use of intellectual property infringes upon such third party’s intellectual property rights. Any intellectual property litigation or claims brought against us, whether or not meritorious, could result in substantial costs and diversion of our resources, and there can be no assurances that favorable final outcomes will be obtained in all cases. Our business, financial condition or results of operations could be adversely affected as a result.

RISKS RELATED TO INFORMATION TECHNOLOGY, CYBERSECURITY AND DATA PRIVACY

Our failure to comply with applicable federal and state data privacy and security laws could result in civil or criminal sanctions or damage awards, and the proliferation of such laws increases our costs of compliance.

The data protection landscape is rapidly evolving, and we are or may become subject to numerous state and federal laws and regulations governing the collection, use, disclosure, retention, and security of personal information, including health-related information. While we have determined that we are not currently regulated as a covered entity under ~~the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)~~HIPAA and thus are not subject to its requirements or penalties, any entity may be prosecuted under HIPAA’s criminal provisions either directly or under aiding-and-abetting or conspiracy principles. Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive individually identifiable health information from a HIPAA-covered healthcare provider that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information. Even when entities are not covered by HIPAA, ~~the Federal Trade Commission, or~~ the FTC has taken the position that a failure to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. The FTC has broad authority to seek monetary redress for affected consumers and injunctive relief.

In addition, many states impose restrictions related to the confidentiality of personal information that apply more broadly than HIPAA. Please see “Part I, Item 1 - Business - Regulatory Environment – HIPAA and State Privacy and Breach Notification Rules” for a description of some of these state privacy rules. Such information may include certain identifying information and financial information of our patients. These state laws may impose notification requirements in the event of a breach of such personal information. Violations of these laws may result in criminal, civil and administrative sanctions and also may provide individuals with a private right of action with respect to disclosures of personal information. Failure to comply with such data confidentiality, security and breach notification laws may result in substantial monetary penalties or awards of damages.

We expect that the regulatory focus on privacy, security and data use issues will continue to increase and laws and regulations concerning the protection of personal information will expand and become more complex. Such new privacy laws add additional requirements, restrictions and potential legal risk and require additional investment in resources for compliance programs.

Our business model depends on proprietary and third-party management information systems that we use to, among other things, track financial and operating performance of our clinics, and any failure to successfully design and maintain these systems or implement new systems could materially harm our operations.

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We depend on integrated management information systems, some of which are provided by third parties, and standardized procedures for operational and financial information, patient records and billing operations. In 2021, we replaced, upgraded and rolled out our new IT platform, and any problems with system performance could cause disruptions in our business operations, given the pervasive impact of the new system on our processes. In general, we may experience unanticipated delays, complications, data breaches or expenses in replacing, upgrading, implementing, integrating, and operating our systems. Our management information systems regularly require modifications, improvements or replacements that may require both substantial expenditures as well as interruptions in operations. Our ability to implement these systems is subject to the availability of skilled information technology specialists to assist us in creating, implementing and supporting these systems. Our failure to successfully design, implement and maintain all of our systems could have a material adverse effect on our business, financial condition and results of operations.

If we fail to properly maintain the integrity of our data or to strategically implement, upgrade or consolidate existing information systems, our reputation and business could be materially adversely affected.

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We increasingly use electronic means to interact with our customers and collect, maintain and store individually identifiable information, including, but not limited to, personal financial information and health-related information. Despite the security measures we have in place to ensure compliance with applicable laws and rules, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of cyber terrorism, vandalism or theft, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Please see “Part I, Item 1 - Business - Regulatory Environment – HIPAA and State Privacy and Breach Notification Rules” for a description of the November 2022 data breach suffered by one of our vendors, which resulted in the release of certain information with respect to our patients and employees. Additionally, the collection, maintenance, use, disclosure and disposal of individually identifiable data by our businesses are regulated at the federal and state levels as well as by certain financial industry groups, such as the Payment Card Industry organization. Federal, state and financial industry groups may also consider from time-to-time new privacy and security requirements that may apply to our businesses. Compliance with evolving privacy and security laws, requirements, and regulations may result in cost increases due to necessary systems changes, new limitations or constraints on our business models and the development of new administrative processes. They also may impose further restrictions on our collection, disclosure and use of individually identifiable information that is housed in one or more of our databases. Noncompliance with privacy laws, financial industry group requirements or a security breach involving the misappropriation, loss or other unauthorized disclosure of personal, sensitive and/or confidential information, whether by us or by one of our vendors, could have material adverse effects on our business, operations, reputation and financial condition, including decreased revenue; material fines and penalties; increased financial processing fees; compensatory, statutory, punitive or other damages; adverse actions against our licenses to do business; and injunctive relief whether by court or consent order.

If our security systems are breached, we may face civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain patients.

Techniques used to gain unauthorized access to corporate data systems are constantly evolving, and there is a potential for increased cyber-attacks and security challenges as our employees and employees of our vendors and franchisees work remotely from non-corporate managed networks. We may be unable to anticipate or prevent unauthorized access to data pertaining to our patients, including credit card and debit card information and other personally identifiable information. Our systems, which are supported by our own systems and those of third-party vendors, are vulnerable to computer malware, trojans, viruses, worms, break-ins, phishing attacks, denial-of-service attacks, attempts to access our servers in an unauthorized manner, or other attacks on and disruptions of our and third-party vendor computer systems (as in the case of the November 2022 data breach of a vendor’s computer system referenced in the preceding risk factor), any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information. If an actual or perceived breach of security occurs on our systems or a vendor’s systems, we could face civil liability and reputational damage, either of which would negatively affect our ability to attract and retain patients. We also could be required to expend resources, time and/or effort to mitigate the breach of security and to address related matters, as we did in the case of the aforementioned November 2022 data breach, although we are entitled to indemnification under the contract with the vendor for costs incurred in the case of the November 2022 breach.

We may not be able to effectively control the unauthorized actions of third parties who may have access to the patient data we collect. Any failure, or perceived failure, by us to maintain the security of data relating to our patients and employees, and to comply with our posted privacy policy, laws and regulations, rules of self-regulatory organizations, industry standards and contractual provisions to which we may be bound, could result in the loss of confidence in us, or result in actions against us by

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governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose patients, revenue and employees.

We are subject to a number of risks related to credit card and debit card payments we accept.

We accept payments through credit and debit card transactions. For credit and debit card payments, we pay interchange and other fees, which may increase over time. An increase in those fees would require us to either increase the prices we charge for our services, which could cause us to lose patients and revenue, or absorb an increase in our operating expenses, either of which could harm our operating results.

If we or any of our processing vendors have problems with our billing software, or the billing software malfunctions, it could have an adverse effect on patient satisfaction and could cause one or more of the major credit card companies to disallow our continued use of their payment products. In addition, if our billing software fails to work properly, and as a result, we do not automatically process monthly membership fees to our patients’ credit cards on a timely basis or at all, or there are issues with financial insolvency of our third-party vendors or other unanticipated problems or events, we could lose revenue, which would harm our operating results.

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We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it more difficult for us to comply. Based on the self-assessment completed as of January ~~19, 2023,~~22, 2024, we are currently in compliance with the Payment Card Industry Data Security Standard, or PCI DSS, the payment card industry’s security standard for companies that collect, store or transmit certain data regarding credit and debit cards, credit and debit card holders and credit and debit card transactions. There is no guarantee that we will maintain PCI DSS compliance. Our failure to comply fully with PCI DSS in the future could violate payment card association operating rules, federal and state laws and regulations and the terms of our contracts with payment processors and merchant banks. Such failure to comply fully also could subject us to fines, penalties, damages and civil liability and could result in the suspension or loss of our ability to accept credit and debit card payments. Although we do not store credit card information and we do not have access to our patients’ credit card information, there is no guarantee that PCI DSS compliance will prevent illegal or improper use of our payment systems or the theft, loss, or misuse of data pertaining to credit and debit cards, credit and debit card holders and credit and debit card transactions.

If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures and significantly higher credit card-related costs, each of which could adversely affect our business, financial condition and results of operations. If we are unable to maintain our chargeback or refund rates at acceptable levels, credit and debit card companies may increase our transaction fees, impose monthly fines until resolved or terminate their relationships with us. Any increases in our credit and debit card fees could adversely affect our results of operations, particularly if we elect not to raise our rates for our service to offset the increase. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.

GENERAL RISK FACTORS

We have restated our prior consolidated financial statements, which may lead to additional risks and uncertainties,

including loss of investor confidence and negative impacts on our stock price.

~~As discussed in Note 2 to our consolidated financial statements included in Item 8 of this Form 10-K/A,~~On September 26, 2023, we ~~have~~ restated our consolidated financial statements as of and for the years ended December 31, 2022 and 2021 and for the quarterly periods within the fiscal years ended December 31, 2022 and 2021 (the “Restated Periods”). The determination to restate the financial statements for the Restated Periods was made by our Audit Committee and our Board of Directors upon management’s recommendation following the identification of errors related to our method of accounting for the reacquisition of regional developer rights and transfer pricing adjustments for ~~the Company’s variable interest entities.~~our VIEs. Our management, after consultation with our independent registered accountants, concluded that ~~the Company’s~~our previously issued financial statements for the Restated Periods should no longer be relied upon. Our Annual Report on Form 10-K for the years ended December 31, 2022 and 2021 has been amended by ~~this~~ Form 10-K/A filed on September 26, 2023 to, among other things, reflect the restatement of our financial statements for the Restated Periods.

The restatement of our previously issued financial statements has been time-consuming and expensive and could expose us to additional risks that could materially adversely affect our financial position, results of operations and cash flows, including unanticipated costs for accounting and legal fees in connection with or related to the restatement and the risk of potential stockholder litigation. If lawsuits are filed, we may incur additional substantial defense costs regardless of the outcome of such litigation. Likewise, such events might cause a diversion of our management’s time and attention. If we do not prevail in any

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such litigation, we could be required to pay substantial damages or settlement costs. In addition, the restatement may lead to a loss of investor confidence and have negative impacts on the trading price of our common stock.

Short-selling strategies and negative opinions posted on the internet may drive down the market price of our common stock and could result in class action lawsuits.

Short selling occurs when an investor borrows a security and sells it on the open market, with the intention of buying identical securities at a later date to return to the lender. A short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares. Because it is in the short seller's best interests for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding an issuer, its business prospects, and similar matters which may create a negative depiction of the company. This information is often widely distributed, including through platforms that mainly serve as hosts seeking advertising revenue. Issuers who have limited trading volumes and are thus susceptible to higher volatility levels than large-cap stocks can be particularly vulnerable to such short seller attacks.

We may be subject to short selling strategies that may drive down the market price of our common stock. In 2021, we were the target of negative allegations posted on an internet platform designed to advise short sellers, which precipitated a decline in the

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price of our stock. Shortly thereafter, several plaintiffs' law firms announced investigations into potential securities laws violations based on these allegations. While we believe these allegations are without merit, and no litigation has been commenced to date regarding such allegations, we still face the potential (albeit a diminishing one, given the passage of time) for litigation to be initiated against us. While we would vigorously defend against any such litigation, regardless of outcome, litigation can be costly and time-consuming, divert the attention of our management team, adversely impact our reputation and brand, and if a plaintiff claim were successful, could result in significant liability, all of which could harm our business and financial condition.

Future sales of our common stock may depress our stock price and our share price may decline due to the large number of shares eligible for future sale or exchange.

The market price of our common stock could decline as a result of sales of a large number of shares of common stock in the market or the perception that such sales could occur. These sales, or the possibility that these sales may occur, might also make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of December 31, ~~2022,~~2023, we had ~~14,528,487~~14,751,633 outstanding shares of common stock and are authorized to sell up to 20,000,000 shares of common stock. The trading volume of shares of our common stock averaged approximately ~~219,044~~136,520 shares per day during the year ended December 31, ~~2022.~~2023. Accordingly, sales of even small amounts of shares of our common stock by existing stockholders may drive down the trading price of our common stock.

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

Our amended and restated certificate of incorporation and bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, we have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by our Board of Directors. Under the terms of such indemnification agreements, we are required to indemnify each of our directors and officers, to the fullest extent permitted by the laws of the state of Delaware, if the basis of the indemnitee’s involvement was by reason of the fact that the indemnitee is or was a director or officer of ~~the Company~~our company or any of its subsidiaries or was serving at ~~the Company’s~~our request in an official capacity for another entity. Any claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims and may reduce the amount of money available to us.

The delayed filing of our quarterly report has made us currently ineligible to use a registration statement on Form S-3 to register the offer and sale of securities, which could adversely affect our ability to raise future capital or complete acquisitions.

As a result of the delayed filing of our quarterly report with the SEC, we will not be eligible to register the offer and sale of our securities using a registration statement on Form S-3 until one year from the date we regain and maintain status as a current filer. Should we wish to register the offer and sale of our securities to the public prior to the time we are eligible to use Form S-3, both our transaction costs and the amount of time required to complete the transaction could increase, making it more difficult to execute any such transaction successfully and potentially harming our financial condition.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

Our Chief Technology Officer (“CTO”) is responsible for cybersecurity within our company, including information technology risks, controls, strategies and procedures. The Cybersecurity Subcommittee of the Board of Directors oversees cybersecurity for our company and meets with the CTO at least quarterly to discuss the status of cybersecurity efforts as well as any security incidents. Cybersecurity Subcommittee materials are provided to the Audit Committee as well as the full Board of Directors. The Board of Directors believes that a strong cyber strategy based on industry accepted best practices is vital to protect our business, customers and assets.

A dedicated team of technology professionals works throughout the year to monitor all matters of risk relating to cybersecurity. We have begun our certification process for the globally recognized International Organization for Standardization certification for Information Security Management Systems (ISO 27001) that we expect to achieve by the second quarter of 2024. Additionally, we operate and are compliant under the following provisions: HIPAA attestation for the HIPAA Security Rule and the Health Information Technology for Economic and Clinical Health Act (HITECH) Breach Notification requirements.

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~~None.~~Vendors that have access to our information are required to manage such information in accordance with laws and appropriate privacy and security standards. Standards are applied on a per-contract basis and include requirements to have an information security program and report to us any incidents in which its confidential information or systems are compromised. Depending on the nature of the vendors' access to our information, we monitor and evaluate the controls and governance established with the vendors ranging from a continuous cadence to at least quarterly.

We annually assess our cybersecurity programs against third-party requirements, including HIPAA and the Sarbanes-Oxley Act (SOX). We test multiple aspects of cybersecurity regularly, including annual pen testing over our proprietary information systems and have historically tested annually and beginning 2024 will test semi-annually our technical recovery and incident response procedures.

We maintain a robust privacy compliance program. Employees receive periodic email communications, which train them to detect and report malware, ransomware and other malicious software and social engineering attempts that may compromise our information technology systems. In the first quarter of 2024, we will be implementing a best in class security awareness training system and a quarterly training program for all employees.

Currently, we rely on an established major incident management and communication process to address any potential cybersecurity incidents. This established process includes the use of third party partnerships to make available the distinct skill sets needed to assist in properly responding to any cybersecurity threat. We are in process of establishing defined response procedures to effectively address any cyber threat that may occur regardless of the safeguards in place that minimize the chance of a successful cyberattack. The response procedures will be designed to identify, analyze, contain and remediate such cyber incidents expeditiously. These procedures and approach to safeguard our information and assets will be continuously monitored by management and updated to evolve with the current cyber landscape in alignment with the ISO 27001 standard mentioned above.

ITEM 2. PROPERTIES

We lease the property for our corporate headquarters and all of the properties on which we own or manage clinics. As of December 31, ~~2022,~~2023, we leased 138 facilities in which we operate or intend to operate clinics. We are obligated under two additional leases for facilities in which we have ceased clinic operations.

Our corporate headquarters are located at 16767 N. Perimeter Center Drive, Suite 110, Scottsdale, Arizona 85260. The term of our lease for this location expires on December 31, 2025. The primary functions performed at our corporate headquarters are financial, accounting, treasury, marketing, operations, human resources, information systems support and legal.

We are also obligated under non-cancellable leases for the clinics which we own or manage. Our clinics are on average 1,200 square feet. Our clinic leases generally have an initial term of five years, include one to two options to renew for terms of five years, and require us to pay a proportionate share of real estate taxes, insurance, common area maintenance charges and other operating costs.

ITEM 3. LEGAL PROCEEDINGS

~~In the normal course of business, we are party~~Information regarding our legal proceedings is discussed in Note 10 to litigation and claims from time to time. We maintain insurance to cover certain litigation and claims. In June 2021, we received a draft complaint from an employee, claiming that we had vicarious and other liability with respect to alleged wrongful acts committed by a former employee. In February 2022, the claim was settled for a total of $750,000. We also recognized a $250,000 insurance recovery asset associated with the settlement. The $500,000 net impact of the settlement is included in our ~~consolidated income statement for the year ended December 31, 2021. Please see Note 11, “Commitments and Contingencies” in the Notes to~~ consolidated financial statements, ~~included in Item 8 of this report for further discussion.~~which is incorporated herein by reference.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the ~~NASDAQ~~Nasdaq Capital Market under the symbol “JYNT.”

Holders

As of December 31, ~~2022,~~2023, there were approximately 33104 holders of record of our common stock and ~~14,528,487~~14,751,633 shares of our common stock outstanding.

Dividends

Since our initial public offering, we have not declared nor paid dividends on our common stock, and we do not expect to pay cash dividends on our common stock in the foreseeable future.

ITEM 6. [Reserved]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of ~~the~~our results of operations and financial condition ~~of The Joint Corp.~~ for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 should be read in conjunction with the consolidated financial statements and the notes thereto, and other financial information contained elsewhere in this ~~Amendment.~~Form 10-K. Information pertaining to fiscal year ~~2020~~2021 was included in our Amended Annual Report on Form ~~10-K~~10-K/A for the year ended December 31, ~~2020 on pages 31-40~~2021 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on ~~March 5, 2021.~~September 26, 2023.

Overview

~~Our principal business is to develop, own, operate, support~~We are a rapidly growing franchisor and ~~manage~~operator of chiropractic clinics ~~through franchising and regional developers and through direct ownership and management arrangements throughout the United States.~~

that uses a private pay, non-insurance, cash-based model. We seek to be the leading provider of chiropractic care in the markets we serve and to become the most recognized brand in our ~~industry through~~industry. We delivered over 13.6 million patient visits in 2023, up from 12.2 million patient visits in 2022, generating over $488.0 million and $435 million of system-wide sales, respectively, across our highly franchised network. We will continue the rapid and franchised focused expansion of chiropractic clinics in key markets throughout North America and potentially abroad. We saw over ~~845,000~~932,000 new patients in ~~2022, despite the continued pandemic,~~2023, with approximately 36% of those new patients visiting a chiropractor for the first time. We are not only increasing our percentage of market share, but are expanding the chiropractic market.

Key Performance Measures. We receive monthly performance reports from our system and our clinics, which include key performance indicators per clinic, including gross sales, comparable same-store sales growth ~~or “Comp Sales,”~~(“Comp Sales”), number of new patients, conversion percentage and member attrition. In addition, we review monthly reporting related to system-wide sales, clinic openings, clinic license sales and various earnings metrics in the aggregate and per clinic. We believe these indicators provide us with useful data with which to measure our performance and to measure our franchisees’ and clinics’ performance. System-wide Comp Sales include the sales from both company-owned or managed clinics and franchised clinics that in each case have been open at least 13 full months and exclude any clinics that have closed. While gross sales from franchised ~~sales~~clinics are not recorded as revenues by us, management believes the information is important in understanding the overall brand’s financial performance, because these sales are the basis on which we calculate and record royalty fees and are indicative of the financial health of the franchisee base.

Key Clinic Development Trends. As of December 31, ~~2022,~~2023, we and our franchisees operated or managed ~~838~~935 clinics, of which ~~712~~800 were operated or managed by franchisees and ~~126~~135 were operated as company-owned or managed clinics. We and our franchisees opened 114 clinics during 2023, 104 franchised clinics and 10 company-owned or managed clinics. This compares to 137 clinics opened in 2022, 121 franchised clinics and 16 company-owned or managed clinics. Of the ~~126~~135 company-owned or managed clinics 57at December 31, 2023, 65 were constructed and developed by us, and 6970 were acquired from franchisees.

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Our current strategy is to grow through the sale and development of additional ~~franchises~~franchises. After evaluating options for improvement, during 2023 the board authorized management to initiate a plan to re-franchise or sell the majority of our company-owned or managed clinics. This refined strategy will leverage our greatest strength – our capacity to build a franchise – to drive long-term growth for both our franchisees and ~~continue~~The Joint as a public company. We have created a robust framework for the re-franchising effort, organizing clinics into clusters, and generating comprehensive disclosure packets for marketing efficiency. We have given initial preference to ~~expand~~existing franchisees and have received significant interest to date. Our goal will be to generate significant proceeds that will provide us with value creating capital allocation opportunities. These opportunities could include, but are not limited to, reinvestment in the brand and related marketing, continued investment in our ~~corporate clinic portfolio within clustered locations.~~ IT platforms, the repurchase of RD territories, and/or a stock repurchase program.

The number of franchise licenses sold for the year ended December 31, ~~2022~~2023 was ~~75,~~55, compared with ~~156~~75 and ~~121~~156 licenses for the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. We ended ~~2022~~2023 with 1817 regional developers who were responsible for ~~67%~~51% of the 7555 licenses sold during the year. This strong result reflects the power of the regional developer program to accelerate the number of clinics sold, and eventually opened, across the country.

~~In addition, we~~We believe that we can accelerate the development of, and revenue generation from, company-owned or managed clinics through the accelerated development of greenfield clinics and the further selective acquisition of existing franchised clinics. We will seekcontinue to acquire existing franchised clinics that meet our criteria for demographics, site attractiveness, proximity to other clinics and additional suitability factors. During the quarter ended December 31, 2022, we opened four greenfield clinics, and as of December 31, 2022, we executed 8 leases for future greenfield clinic locations for further greenfield expansion.

~~We believe that The Joint has~~have a sound business concept ~~which was further validated through its resiliency during the pandemic~~ and will benefit from the fundamental changes taking place in the manner in which Americans access chiropractic care and their growing interest in seeking effective, affordable natural solutions for general wellness. These trends join with the preference we have seen among chiropractic doctors to reject the insurance-based model to produce a combination that benefits the consumer and the service provider alike. We believe that these forces create an important opportunity to accelerate the growth of our network.

~~Restatement of Previously Issued Consolidated Financial Statements~~

The Company concluded that the Company’s previously issued financial statements for the years ended December 31, 2022 and 2021 and interim quarters and cumulative periods ended June 30, 2022 and 2021, and September 30, 2022 and 2021 should be restated to correct historical errors related principally to the accounting for (i) the purchase of reacquired Regional Developer Rights and (ii) impact of certain transfer pricing adjustments for the Company’s consolidated VIEs.~~The discussion of financial results presented herein is reflective of the restatement adjustments.~~

Default Under Credit Agreement

On September 8, 2023, JP Morgan Chase waived, on a one-time only basis, a default that occurred under the Credit Agreement.The default occurred as of the close of business on September 6, 2023.The default resulted from ~~the Company’s~~our inability to deliver in a timely manner the financial statements in its Quarterly Report on Form 10-Q for the period ended June 30, 2023 (the “2023 Q2 10-Q”).~~The Company’s~~ Our inability to produce and file the 2023 Q2 10-Q in a timely manner (which filing constitutes delivery to JP Morgan Chase of ~~the Company’s~~our financial statements) was the result of the discovery of errors in the US GAAP accounting treatment for re-acquired regional developer rights and for transfer pricing for ~~its variable interest entities.~~our VIEs. JP Morgan Chase waived this default until September 30, 2023.The filing of ~~the Company’s Quarterly Report~~our 2023 Q2 10-Q on ~~Form 10-Q prior to~~ September ~~30,~~26, 2023 ~~will cure~~cured the default.

Recent Events

Recent events that may impact our business include unfavorable global economic or political conditions, such as the ~~Covid-19 pandemic,~~Ukraine War, the ~~Ukraine War,~~Israel-Gaza conflict, labor shortages, and inflation and other cost increases. We anticipate that ~~2023~~2024 will continue to be a volatile macroeconomic environment. As of the date of this Annual Report, we have not experienced a significant negative impact on our revenues and profitability due to the direct impact of the pandemic. However, there still remains uncertainty around the pandemic, its effect on labor or other macroeconomic factors, the severity and duration of the pandemic, the continued availability and effectiveness of vaccines and actions taken by government authorities, including restrictions, laws or regulations, and other third parties in response to the pandemic.

The primary inflationary factor affecting our operations is labor costs. In ~~the fourth quarter of 2021~~2022 and ~~in 2022, company-owned~~2023, clinics owned or managed ~~clinics~~by us or our franchisees were negatively impacted by labor shortages and wage increases, which increased our general and administrative expenses. Further, should we fail to continue to increase our wages competitively in response to increasing wage rates, the quality of our workforce could decline, causing our patient service to suffer. ~~We expect elevated levels of cost inflation to persist in 2023.~~ While we anticipate that these continued headwinds ~~will~~can be partially mitigated by pricing actions, ~~taken in response to inflation,~~ there can be no assurance that we will be able to continue to take such pricing actions. A continued increase in labor costs could have an adverse effect on our operating costs, financial condition and results of operations.

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~~Also, the Ukraine War and the sanctions imposed on Russia in response to this conflict have increased global economic and political uncertainty.~~ In addition, the increase in interest rates and the expectation that interest rates will continue to ~~rise~~remain elevated may adversely affect patients' financial conditions, resulting in reduced spending on our services. While the impact of these factors continues to remain uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, or results of operations. These and other uncertainties with respect to these recent events could result in changes to our current expectations.

Significant Events and/or Recent Developments

For the year ended December 31, ~~2022:~~2023:

•Comp Sales of clinics that have been open for at least 13 full months increased 9%4%.

•Comp Sales for mature clinics open 48 months or more ~~increased 4%~~decreased 1%.

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•System-wide sales for all clinics open for any amount of time grew ~~21%~~12% to ~~$435.3~~$488.0 million.

We saw over 932,000 new patients in 2023, compared with 845,000 new patients in 2022, ~~compared with 807,000 new patients in 2021,~~ with approximately 36% of those new patients having never been to a chiropractor before. We are not only increasing our percentage of market share, but expanding the chiropractic market. These factors, along with continued leverage of our operating expenses, drove improvement in our bottom line.

On ~~February 28, 2022,~~November 6, 2023, we discussed certain strategic initiatives with the Board of Directors and were authorized to initiate a plan to re-franchise the majority of our corporate-owned or managed clinics with plans to retain a small portion of high-performing clinics. Based on the timing and varied scope of the initiative, we are unable to estimate the financial impact of such plans.

In October 2023, we entered into ~~an amendment~~two separate letters of intent to sell two of our ~~Credit Facilities (as amended, the “2022 Credit Facility”) with the~~

~~Lender. Under the 2022 Credit Facility, the Revolver increased to $20,000,000 (from $2,000,000), the portion~~company-owned or managed clinics that were part of the ~~Revolver available~~approximately 10% of clinics identified for ~~letters~~sale and classified as held for sale as of ~~credit increased~~September 30, 2023 for a combined total sales price of $185,000. The sales are expected to ~~$5,000,000 (from $1,000,000),~~close during the ~~uncommitted additional amount increased~~first quarter of 2024, subject to $30,000,000 (from $2,500,000) and the developmental line of credit of $5,500,000 was terminated. The Revolver will be used for working capital needs, general corporate purposes and for acquisitions, development and capital improvement uses.

customary closing conditions.

On ~~March 18, 2022,~~June 15, 2023, we entered into an agreement under which we repurchased the right to develop franchises in various counties in ~~New Jersey.~~Wisconsin. The total consideration for the transaction was ~~$250,000.~~$1.0 million. We carried an upfront regional developer ~~fees~~fee liability balance associated with this transaction of $95,197, representing the unrecognized fee collected upon the execution of the regional developer agreement. We accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred liability was netted against the aggregate purchase price. We recognized the net amount of $154,803 as general and administrative expenses on March 18, 2022.

On April 1, 2022, we entered into an agreement under which we repurchased the right to develop franchises in various counties in California. The total consideration for the transaction was $2,400,000. We carried a deferred liability balance associated with this transaction of $357,721,$0.3 million, representing the unrecognized fee collected upon the execution of the regional developer agreement. We accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated upfront regional developer ~~fees~~fee liability was netted against the aggregate purchase price. We recognized the net amount of ~~$2,042,279~~$0.7 million as a general and administrative ~~expenses~~expense on ~~April 1, 2022.~~

June 15, 2023.

On May 19, 2022, we entered into an Asset and Franchise Purchase Agreement under which we repurchased from the seller four operating franchises in Arizona. We operate the franchises as company-owned clinics. The total purchase price for the transaction was $5,761,256, less $70,484 of net deferred revenue, resulting in total purchase consideration of $5,690,772. Based on the terms of the purchase agreement, the acquisition has been treated as a business combination under U.S. GAAP using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

On July 5, 2022, we entered into an Asset and Franchise Purchase Agreement under which we repurchased from the seller an operating franchise in Arizona. We operate the franchise as a company-owned clinic. The total purchase price for the transaction was $1,205,667, less $13,241 of net deferred revenue, resulting in total purchase consideration of $1,192,426. Based on the terms of the purchase agreement, the acquisition has been treated as a business combination.

On July 29, 2022, we entered into an Asset and Franchise Purchase Agreements under which we repurchased from the sellers three operating franchises in North Carolina. We operate the franchises as company-managed clinics. The total purchase price for the transaction was $1,317,312, less $31,647 of net deferred revenue, resulting in total purchase consideration of $1,285,665. Based on the terms of the purchase agreement, the acquisition has been treated as an asset purchase.

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On October 12, 2022, we entered into an agreement under which we repurchased the right to develop franchises in various counties in the Philadelphia area. The total consideration for the transaction was $225,000. We carried an upfront regional developer fees liability balance associated with this transaction of $176,118, representing the unrecognized fee collected upon the execution of the regional developer agreement. We accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated upfront regional developer fees liability was netted against the aggregate purchase price. We recognized the net amount of $48,882 as general and administrative expenses on October 12, 2022.

~~On October 13, 2022, we entered into an Asset and Franchise Purchase Agreement under which we repurchased from the seller~~

~~one operating franchise in North Carolina. We operate the franchise as a company-managed clinic. The total purchase price for~~

the transaction was $761,384, less $5,108 of net deferred revenue, resulting in total purchase consideration of $756,276. Based on the terms of the purchase agreement, the acquisition has been treated as an asset purchase.

On October 24, 2022, we entered into an Asset and Franchise Purchase Agreement under which we repurchased from the seller an operating franchise in North Carolina. We operate the franchise as a company-managed clinic. The total purchase price for the transaction was $1,391,112, less $9,262 of net deferred revenue, resulting in total purchase consideration of $1,381,850. Based on the terms of the purchase agreement, the acquisition has been treated as an asset purchase.

~~On December 23, 2022,~~22, 2023, we entered into an Asset and Franchise Purchase Agreement under which we repurchased from the sellers ~~six~~three operating ~~franchises and one undeveloped clinic~~franchised clinics in California. We operate the franchises as company-managed clinics. The total purchase price for the transaction was ~~$1,965,755,~~$1,188,764, less ~~$70,628~~$28,997 of net deferred revenue, resulting in total purchase consideration of ~~$1,895,127.~~$1,159,767. Based on the terms of the purchase agreement, the acquisition has been treated as an asset purchase.

For the year ended December 31, ~~2022,~~2023, we constructed and developed 1610 new corporate clinics.

Factors Affecting Our Performance

Our operating results may fluctuate significantly as a result of a variety of factors, including the timing of new clinic sales, openings, closures, markets in which they are contained and related expenses, general economic conditions, cost inflation, labor shortages, consumer confidence in the economy, consumer preferences, competitive factors, and disease epidemics and other health-related concerns, such as the COVID-19 pandemic.

Significant Accounting Polices and Estimates

The preparation of consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our accounting estimates on historical experience and other factors that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. We have discussed the development and selection of significant accounting policies and estimates with our Audit Committee.

Acquisitions

We allocate the purchase price of acquired companies to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill. When an acquisition is accounted for in accordance with the acquisition of assets rather than a business, goodwill is not recognized and instead, any excess of the cost of the acquisition over the fair value of net assets acquired is allocated to certain assets on the basis of relative fair values. The allocation of the purchase price requires us to make significant estimates and assumptions to determine the fair value of assets acquired and liabilities assumed and the related useful lives of the acquired assets, when applicable, as of the acquisition date.

Examples of critical estimates used in valuing certain intangible assets we have acquired or may acquire in the future include, but are not limited to, future expected cash flows and member relationships, revenue growth rates, the period of time the acquired member relationships will continue to be used, anticipated member attrition rates, and discount rates used to determine

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the present value of estimated future cash flows. We engage third-party valuation experts to assist in determining the fair value associated with our acquisitions and related identifiable intangible assets. These estimates are inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition could be allocated to the acquired assets and assumed liabilities differently from the allocation that we have made.

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Intangible Assets

Intangible assets consist primarily of re-acquired franchise rights and customer relationships. We amortize the fair value of re-acquired franchise rights over the remaining contractual terms of the re-acquired franchise rights at the time of the acquisition, which range from one to ten years. The fair value of customer relationships is amortized over their estimated useful life which ranges from two to four years.

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions of franchises treated as a business combination under ~~U.S.~~ GAAP. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. As required, we perform an annual impairment test of goodwill as of the first day of the fourth quarter or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. No impairments of goodwill were recorded for the years ended December 31, ~~2022~~2023 and ~~2021.~~2022.

Long-Lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. We look primarily to estimated undiscounted future cash flows in the assessment of whether or not long-lived assets are recoverable. We record an impairment loss when the carrying amount of the asset is not recoverable and exceeds its fair value. During the year ended December 31, 2023, intangible assets and property and equipment, net related to a closed clinic and asset groups determined to not be recoverable with a total carrying amount of approximately $3.0 million was written down to $1.2 million. As a result, we recorded a noncash impairment loss of approximately $1.8 million during the year ended December 31, 2023. During the year ended December 31, 2022, an operating lease ROU asset related to a closed clinic with a total carrying amount of ~~approximately~~ $0.2 million was written down to their fair value of zero. As a result, we recorded a noncash impairment loss of approximately $0.2 million ~~during~~for the year ended December 31, 2022. During the year ended December 31, 2021, certain operating lease ROU assets related to closed clinics with a total carrying amount of $0.5 million were written down to their fair value of $0.4 million. As a result, we recorded a noncash impairment loss of approximately $0.1 million for the year ended December 31, 2021

Stock-Based Compensation

We account for share-based payments by recognizing compensation expense based on the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of restricted shares using the closing price on the date of the grant and the grant-date fair value of stock options using the Black-Scholes-Merton model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the period of service using the straight-line method. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%.

Revenue Recognition

We generate revenue ~~primarily~~ through our company-owned and managed clinics and through royalties, franchise fees, advertising fund contributions, IT related income and computer software fees from our franchisees.

Revenues from Company-Owned or Managed Clinics. We earn revenue from clinics that we own and operate or manage throughout the United States. In those states where we own and operate the clinic, revenues are recognized when services are performed. We offer a variety of membership and wellness packages which feature discounted pricing as compared with our single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed. Any unused visits associated with monthly memberships are recognized on a month-to-month basis. We recognize a contract liability (or a deferred revenue liability) related to the prepaid treatment plans for which we have an ongoing performance obligation. We recognize this contract liability, and recognize revenue, as the patient consumes his or her visits related to the package and we perform the services. If we determine that it is not subject to unclaimed property laws for the portion of wellness package that we do not expect to be redeemed (referred to as “breakage”), then we recognize breakage revenue in proportion to the pattern of exercised rights by the patient.

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Royalties and Advertising Fund Revenue. We collect royalties from our franchisees, as stipulated in the franchise agreement, equal to 7% of gross sales and a marketing and advertising fee currently equal to 2% of gross sales. Royalties, including franchisee contributions to advertising funds, are calculated as a percentage of clinic sales over the term of the franchise agreement. The revenue accounting standard provides an exception for the recognition of sales-based royalties promised in

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exchange for a license (which generally requires a reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). The franchise agreement royalties, inclusive of advertising fund contributions, represent sales-based royalties that are related entirely to our performance obligation under the franchise agreement and are recognized as franchisee clinic level sales occur. Royalties and marketing and advertising fees are collected bi-monthly two working days after each sales period has ended.

Franchise Fees. We require the entire non-refundable initial franchise fee to be paid upon execution of a franchise agreement, which typically has an initial term of ~~ten~~10 years. Initial franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. Our services under the franchise agreement include training of franchisees and staff, site selection, construction/vendor management and ongoing operations support. We provide no financing to franchisees and generally offer no guarantees on their behalf. The services we provide are highly interrelated with the franchise license and as such are considered to represent a single performance obligation.

Software Fees. We collect a monthly fee from our franchisees for use of our proprietary chiropractic software, computer support, and internet services support. These fees are recognized ratably on a straight-line basis over the term of the respective franchise agreement.

Regional Developer Fees

We have a regional developer program where regional developers are granted an exclusive geographical territory and commit to a minimum development obligation within that defined territory. Regional developer fees are non-refundable and amortized on a straight-line basis over the term of the regional developer agreement and recognized as a decrease to franchise and regional developer cost of revenues.

In addition, we pay regional developers fees, which are funded by the initial franchise fees collected from franchisees upon the sale of franchises within their exclusive geographical territory, and a royalty of 3% of sales generated by franchised clinics in their exclusive geographical territory. Fees related to the sale of franchises within their exclusive geographical territory are initially deferred as deferred franchise costs and are recognized as an expense in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. Royalties of 3% of gross sales generated by franchised clinics in their regions are also recognized as franchise cost of revenues as franchisee clinic level sales occur, which is funded by the 7% royalties we collect from the franchisees in their regions. Certain regional developer agreements result in the regional developer acquiring the rights to existing royalty streams from clinics already open in the respective territory. In those instances, the revenue associated from the sale of the royalty stream is recognized over the remaining life of the respective franchise agreements.

Leases

The accounting guidance for leases requires lessees to recognize ~~a right-of-use ("ROU")~~an ROU asset and a lease liability in the balance sheet for most leases. The lease liability is measured at the present value of the fixed lease payments over the lease term and the ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at our sole discretion and, as such, we typically determine that exercise of these renewal options is not reasonably certain. As a result, we do not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the ~~right-of-use~~ROU asset and lease liability. When available, we use the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of our leases. In such cases, we estimate our incremental borrowing rate as the interest rate we would pay to borrow an amount equal to the lease payments over a similar term, with similar collateral as in the lease, and in a similar economic environment. We estimate these rates using available evidence such as rates imposed by third-party lenders in recent financings or observable risk-free interest rate and credit spreads for commercial debt of a similar duration, with credit spreads correlating to our estimated creditworthiness.

For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. Pre-opening costs are recorded as incurred in general and administrative expenses. Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable

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costs associated with the leased property are expensed as incurred and are also included in general and administrative expenses on the consolidated income statements.

Income Taxes

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We recognize deferred tax assets and liabilities for both the expected impact of differences between the financial statement amount and the tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards.

We record a valuation allowance against deferred tax assets when it is considered more likely than not that all or a portion of our deferred tax assets will not be realized. In making this determination, we are required to give significant weight to evidence that can be objectively verified. It is generally difficult to conclude that a valuation allowance is not needed when there is significant negative evidence, such as cumulative losses in recent years. Forecasts of future taxable income are considered to be less objective than past results. Therefore, cumulative losses weigh heavily in the overall assessment.

In addition to considering forecasts of future taxable income, we are also required to evaluate and quantify other possible sources of taxable income in order to assess the realization of our deferred tax assets, namely the reversal of existing temporary differences, the carry back of losses and credits as allowed under current tax law, and the implementation of tax planning strategies. Evaluating and quantifying these amounts involves significant judgments. Each source of income must be evaluated based on all positive and negative evidence; this evaluation involves assumptions about future activity. The actual realization of deferred tax assets may differ from the amounts we have recorded.

Significant judgment is also required in evaluating our uncertain tax positions. We establish accruals for uncertain tax positions when we believe that the full amount of the associated tax benefit may not be realized. If we prevail in matters for which accruals have been established previously or pay amounts in excess of reserves, there could be an effect on our income tax provisions in the period in which such determination is made.

We regularly assess the tax risk of our tax return filing positions, and we have identified ~~$1.3~~$1.2 million and $1.3 million in uncertain tax positions as of December 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Loss Contingencies

Accounting Standards Codification 450, Contingencies (“ASC 450”), governs the disclosure of loss contingencies and accrual of loss contingencies in respect of litigation and other claims. We record an accrual for a potential loss when it is probable that a loss will occur and the amount of the loss can be reasonably estimated. When the reasonable estimate of the potential loss is within a range of amounts, the minimum of the range of potential loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Moreover, even if an accrual is not required, we provide additional disclosure related to litigation and other claims when it is reasonably possible (i.e., more than remote) that the outcomes of such litigation and other claims include potential material adverse impacts on us. Legal costs to be incurred in connection with a loss contingency are expensed as such costs are incurred.

Results of Operations ~~(as Restated)~~

The following discussion and analysis of our financial results encompasses our consolidated results and results of our two business segments: Corporate Clinics and Franchise Operations.

Total Revenues

Components of revenues for the year ended December 31, ~~2022,~~2023, as compared to the year ended December 31, ~~2021,~~2022, were as follows:

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		Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
		2022		2021
	Year Ended December 31,																			Year Ended December 31,										Change from Prior Year				Percent Change from Prior Year
	2023
		(As Restated)		(As Restated)
Revenues:	Revenues:

Revenues:

Revenues:
Revenues from company-owned or managed clinics
Revenues from company-owned or managed clinics
Revenues from company-owned or managed clinics	Revenues from company-owned or managed clinics	$	59,422,294	$	44,348,234	$	15,074,060	34.0	%	$	70,718,880			$		$	59,422,294			$			$	11,296,586			19.0			19.0	%
Royalty fees	Royalty fees	26,190,531		22,062,989		4,127,542		18.7	%	Royalty fees		29,160,831			26,190,531				26,190,531			2,970,300					2,970,300		11.3			11.3	%
Franchise fees	Franchise fees	2,441,325		2,659,097		(217,772)		(8.2)	%	Franchise fees		2,882,895			2,441,325				2,441,325			441,570					441,570		18.1			18.1	%
Advertising fund revenue	Advertising fund revenue	7,456,696		6,298,924		1,157,772		18.4	%	Advertising fund revenue		8,321,043			7,456,696				7,456,696			864,347					864,347		11.6			11.6	%
Software fees	Software fees	4,290,739		3,383,856		906,883		26.8	%	Software fees		5,086,562			4,290,739				4,290,739			795,823					795,823		18.5			18.5	%
Other revenues	Other revenues	1,450,725		1,257,913		192,812		15.3	%	Other revenues		1,526,145			1,450,725				1,450,725			75,420					75,420		5.2			5.2	%
Total revenues	Total revenues	$	101,252,310	$	80,011,013	$	21,241,297	26.5	%	Total revenues		$	117,696,356		$			$	101,252,310		$				$	16,444,046		16.2			16.2	%

The reasons for the significant changes in our components of total revenues were as follows:

Consolidated Results

•Total revenues increased by ~~$21.2~~$16.4 million, primarily due to the continued expansion and revenue growth of our franchise base, continued same-store sales growth and expansion of our corporate-owned or managed clinics portfolio.

Corporate Clinics

•Revenues from company-owned or managed clinics increased, primarily due to ~~improved same-store sales growth, as well as due to~~ the expansion of our corporate-owned or managed clinics portfolio. As of December 31, ~~2022~~2023 and ~~2021,~~2022, there were ~~126~~135 and 96126 company-owned or managed clinics in operation, respectively.

Franchise Operations

•Royalty fees and advertising fund revenue increased due to an increase in the number of franchised clinics in operation during ~~2022,~~2023, along with continued sales growth in existing franchised clinics. As of December 31, ~~2022~~2023 and ~~2021,~~2022, there were ~~712~~800 and ~~610~~712 franchised clinics in operation, respectively.

•Franchise fees revenue ~~was relatively flat as~~increased due to the ~~impact of an~~continued increase in ~~executed~~active franchise ~~agreements was more than offset by~~licenses and the impact of accelerated revenue recognition resulting from the terminated franchise license agreements, ~~in the prior year period. There were no such comparable events during 2022. In addition,~~with 21 and 17 ~~and 12~~ franchise license agreements ~~were~~ terminated during the years ended December 31, 2023 and 2022, ~~and 2021, respectively, in connection with acquisitions, resulting in elimination of fees to be recognized ratably over the term of the original respective franchise agreements.~~respectively.

•Software fees revenue increased due to an increase in our franchised clinic base and the related revenue recognition over the term of the franchise agreement as described above.

•Other revenues primarily consisted of merchant income associated with credit card transactions.

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Cost of Revenues

Year Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
2022 2021
(As Restated) (As Restated)
Cost of Revenues 9,171,063 7,665,138 $ 1,505,925 19.6 %


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022

Cost of Revenues	$	10,546,558	$	9,171,063	$	1,375,495	15.0	%

For the year ended December 31, ~~2022,~~2023, as compared with the year ended December 31, ~~2021,~~2022, the total cost of revenues increased due to an increase in regional developer royalties and sales commissions of ~~$1.2~~$1.3 million and an increase in website hosting costs of ~~$0.3~~$0.1 million.

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Selling and Marketing Expenses

Year Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
2022 2021
Selling and Marketing Expenses 13,962,709 11,424,416 $ 2,538,293 22.2 %


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022
Selling and Marketing Expenses	$	16,541,990	$	13,962,709	$	2,579,281	18.5	%

Selling and marketing expenses increased ~~$2.5~~$2.6 million for the year ended December 31, ~~2022,~~2023, as compared to the year ended December 31, ~~2021,~~2022, driven by an increase in advertising fund expenditures from a larger franchise base and increased local marketing expenditures ~~by the~~from a larger company-owned or managed ~~clinics.~~clinic base.

Depreciation and Amortization Expenses

Year Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
2022 2021
(As Restated) (As Restated)
Depreciation and Amortization Expenses 6,646,622 3,921,887 $ 2,724,735 69.5 %


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022

Depreciation and Amortization Expenses	$	8,582,203	$	6,646,622	$	1,935,581	29.1	%

Depreciation and amortization expenses increased $1.9 million for the year ended December 31, ~~2022,~~2023, as compared to the year ended December 31, ~~2021,~~2022, primarily due to depreciation expenses associated with the expansion of our company-owned or managed clinics ~~portfolio in 2021 and 2022 and the new IT platform used by clinics for operations and for the management of operations, which went live in July 2021.~~portfolio.

General and Administrative Expenses

Year Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
2022 2021
(As Restated) (As Restated)
General and Administrative Expenses 70,233,447 50,846,818 $ 19,386,629 38.1 %


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022

General and Administrative Expenses	$	81,466,088	$	70,233,447	$	11,232,641	16.0	%

General and administrative expenses increased during the year ended December 31, ~~2022~~2023 compared to the year ended December 31, ~~2021,~~2022, primarily due to the increases in the following to support continued clinic count and revenue growth in both operating segments: (i) payroll and related expenses of ~~$14.3 million,~~$8.2 million; (ii) general overhead and administrative expenses of ~~$2.6 million,~~$2.7 million; (iii) professional and advisory fees of $1.0 million ~~(iv) reacquisition of regional developer rights of $0.9 million,~~primarily related to the accounting restatement; and ~~(v)~~(iv) software and maintenance expense of ~~$0.7~~$0.4 million; offset by a decrease in acquisition related expenses of $1.1 million. As a percentage of revenue, general and administrative expenses were flat at 69% during the year ended December 31, 2023 and 2022, ~~and 2021 were 69% and 64%, respectively, reflecting~~respectively.

Net Loss on Disposition or Impairment


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022

Net Loss on Disposition or Impairment	$	2,632,604	$	410,215	$	2,222,389	541.8	%

Net loss on disposition or impairment increased $2.2 million for the ~~impact~~year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to the impairment charges of long-lived assets resulting from the ~~greenfields that opened in 2022.~~planned sale or

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determined closure of certain company-owned or managed clinics classified as held for sale and those classified as held and used that were determined to not be recoverable.

(Loss) Income from Operations

Year Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
2022 2021
(As Restated) (As Restated)
Income from Operations 828,254 6,125,965 $ (5,297,711) (86.5) %


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022

(Loss) Income from Operations	$	(2,073,087)	$	828,254	$	(2,901,341)	(350.3)	%

Consolidated Results

Consolidated income from operations decreased by ~~$5.3~~$2.9 million for the year ended December 31, ~~2022~~2023 compared to the year ended December 31, ~~2021,~~2022, primarily due to the ~~increased expenses~~impairment charges in the corporate clinics and increases in expenses from unallocated corporate segments discussed below.

Corporate Clinics

Our corporate clinics segment had loss from operations of $2.5 million for the year ended December 31, 2023, a decrease in income of $2.6 million compared to income from operations of $0.1 million for the year ended December 31, ~~2022, a decrease in income of $6.5 million compared to income from operations of $6.6 million for the year ended December 31, 2021.~~2022. This decrease was primarily due to:

•A ~~$21.6~~$13.9 million increase in operating expenses primarily due to the increases in the following: (i) payroll-related expenses of ~~$14.7~~$5.6 million due to a higher head count to support the expansion of our corporate clinic portfolio and general wage increases to remain competitive in the current labor ~~market,~~market; (ii) depreciation and amortization expense of ~~$2.3~~$1.9 million primarily associated with the expansion of our company-owned or managed clinics ~~portfolio in 2021 and 2022,~~portfolio; (iii) selling and marketing expenses due to increased local marketing expenditures by the company-owned or managed clinics of ~~$1.4 million,~~$1.9 million; (iv) general overhead and administrative expenses to support the expansion of our corporate clinic portfolio of ~~$2.9 million,~~$2.3 million; and (v) an increase in impairment loss of ~~$0.3~~$2.2 million; partially offset by

•An increase in revenues of ~~$15.1~~$11.3 million from company-owned or managed clinics primarily due to ~~improved same-store growth, as well as~~ the expansion of our corporate-owned or managed clinics portfolio.

Franchise Operations

Our franchise operations segment had income from operations of $20.3 million for the year ended December 31, 2023, an increase of $3.0 million, compared to income from operations of $17.3 million for the year ended December 31, ~~2022, an increase of $2.0 million, compared to income from operations of $15.4 million for the year ended December 31, 2021.~~2022. This increase was primarily due to:

•An increase of ~~$6.2~~$5.2 million in total revenues due to an increase in the number of franchised clinics in operation, along with continued sales growth in existing franchised clinics; partially offset by

•An increase of ~~$1.5~~$1.4 million in cost of revenues, primarily due to an increase in regional developer royalties and website hosting ~~costs and an~~costs. An increase of ~~$2.7~~$0.8 million in operating expenses, primarily due to an increase ~~in:~~in (i) selling and marketing expenses resulting from a larger franchise base of ~~$1.2~~$0.8 million, (ii) ~~reacquisition of regional developer rights of $0.9 million, (iii) depreciation expense associated with the new IT platform of $0.4 million, and (iv)~~ payroll-related expenses of ~~$0.2~~$1.0 million, and (iii) travel costs of $0.1 million; offset by a reduction in acquisition related expenses of $1.1 million.

Unallocated Corporate

Unallocated corporate expenses for the year ended December 31, ~~2022~~2023 increased by ~~$0.8~~$3.3 million compared to the prior year period, primarily due ~~to the increases~~an increase in (i) payroll related expenses of $1.6 million, (ii) professional and advisory fees of ~~$0.8 million.~~$1.0 million primarily related to the accounting restatement, and (iii) general overhead and administrative expenses of $0.7 million primarily related to insurance and software and maintenance expenses.

Income Tax Expense ~~(Benefit)~~

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Table of Contents

Year Ended December 31,
Change from
Prior Year
Percent Change
from Prior Year
2022 2021
(As Restated) (As Restated)
Income tax expense (benefit) 68,448 (1,508,960) $ 1,577,408 (104.5) %


	Year Ended December 31,				Change from Prior Year		Percent Change from Prior Year
	2023		2022

Income tax expense	$	11,390,953	$	68,448	$	11,322,505	16,541.8	%

For the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, the effective tax rates were ~~9.8%~~695.1% and ~~(24.9)%~~9.8%, respectively. The fluctuation in the effective rate was primarily attributable to state taxes, including the change in rates, ~~and~~ stock-based compensation and changes in valuation allowance during the year ended December 31, ~~2022,~~2023, as compared to the year ended December 31, ~~2021.~~2022. Please see Note ~~10,~~9, “Income Taxes” in the Notes to consolidated financial statements included in Item 8 of this ~~report~~Form 10-K for further discussion.

Non-GAAP Financial Measures

The table below reconciles net (loss) income to Adjusted EBITDA for the years ended December 31, ~~2022~~2023 and ~~2021.~~2022.


		Year Ended December 31,
		2022		2021
	Year Ended December 31,											Year Ended December 31,
	2023								2023				2022
		(As Restated)		(As Restated)
Non-GAAP Financial Data:	Non-GAAP Financial Data:
Net income		$	626,705	$	7,565,047
Non-GAAP Financial Data:
Non-GAAP Financial Data:
Net (loss) income
Net (loss) income
Net (loss) income
Net interest	Net interest	133,102		69,878
Depreciation and amortization expense	Depreciation and amortization expense	6,646,622		3,921,887
Income tax expense (benefit)		68,448		(1,508,960)
Income tax expense
EBITDA	EBITDA	7,474,877		10,047,852
Stock compensation expense	Stock compensation expense	1,273,989		1,056,015
Acquisition related expenses	Acquisition related expenses	2,356,049		1,422,137
Net loss on disposition or impairment	Net loss on disposition or impairment	410,215		26,789
Costs related to restatement filings
Restructuring Costs
Other income related to the ERC
Adjusted EBITDA	Adjusted EBITDA	$	11,515,130	$	12,552,793	Adjusted EBITDA	$	12,205,717		$	11,515,129


Delaware			90-0544160
(State or Other Jurisdiction of Incorporation)			(I.R.S. Employer Identification No.)


16767 North Perimeter Drive, Suite 110, Scottsdale, Arizona			85260
(Address of Principal Executive Offices)			(Zip Code)


	Trading
Title Of Each Class	Symbol(s)	Name Of Each Exchange On Which Registered
Common Stock, $0.001 Par Value Per Share	JYNT	The NASDAQ Capital Market LLC


Large accelerated Filer ☐			Accelerated filer ☑
~~Accelerated~~Non-accelerated filer ☐
~~Non-accelerated filer ☑~~			Smaller reporting company ☑
			Emerging growth company ☐


		Page Numbers
PART I

Item 1.	Business	2

Item 1A.	Risk Factors	1615

Item 1B.	Unresolved Staff Comments	2927

Item 1C.	Cybersecurity	27

Item 2.	Properties	3028

Item 3.	Legal Proceedings	26

Item 4.	Mine Safety Disclosures	3129

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	3129

Item 6.	[Reserved]	3129

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3129

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	4440

Item 8.	Financial Statements and Supplementary Data	4441

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	9475

Item 9A.	Controls and Procedures	9476

Item 9B.	Other Information	9678

Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	9678

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	9678

Item 11.	Executive Compensation	9678

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	9678

Item 13.	Certain Relationships and Related Transactions, and Director Independence	9678

Item 14.	Principal Accountant Fees and Services	9778

PART IV

Item 15.	Exhibits, Financial Statement Schedules	9778

Item 16.	Form 10-K Summary	~~100~~82

SIGNATURES		~~101~~83


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


"Our mission is to improve quality of life through routine and affordable chiropractic care."


~~Trademark~~	~~Registration Date~~	~~Registration Number~~
~~The Joint~~	~~February 2017~~	~~1825026~~
~~The Joint Chiropractic~~	~~February 2017~~	~~1825027~~
~~The Joint Chiropractic (stylized)~~	~~February 2017~~	~~1825028~~


		Payments Due by Fiscal Year
		Total		2023	2024	2025	2026	2027	Thereafter
	Payments Due by Fiscal Year													Payments Due by Fiscal Year
	Total									Total	2024	2025	2026	2027	2028	Thereafter
Operating leases	Operating leases	$	27,149,598	6,280,108	5,689,672	5,084,585	3,264,579	2,268,960	4,561,694
Debt under the Credit Agreement	Debt under the Credit Agreement	$	2,000,000	—	—	—	—	2,000,000


			Page
The Joint Corp.

Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Phoenix, Arizona; PCAOB ID #243)			4542
Consolidated Balance Sheets as of December 31, ~~2022~~2023 and ~~2021~~2022			4744
Consolidated Income Statements for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022			5046
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022			5147
Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022			5248
Notes to Consolidated Financial Statements			5450


	December 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	18,153,609	$	9,745,066
Restricted cash	1,060,683		805,351
Accounts receivable	3,718,924		3,911,272
Deferred franchise and regional development costs, current portion	1,047,430		1,054,060
Prepaid expenses and other current assets	2,439,837		2,098,359
Assets held for sale	17,915,055		—
Total current assets	44,335,538		17,614,108
Property and equipment, net	11,044,317		17,475,152
Operating lease right-of-use asset	12,413,221		20,587,199
Deferred franchise and regional development costs, net of current portion	5,203,936		5,707,678
Intangible assets, net	5,020,926		10,928,295
Goodwill	7,352,879		8,493,407
Deferred tax assets ($1.1 million and $1.0 million attributable to VIEs as of December 31, 2023 and 2022)	1,031,648		11,928,152
Deposits and other assets	748,394		756,386
Total assets	$	87,150,859	$	93,490,377

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,625,088	$	2,966,589
Accrued expenses	1,963,009		1,069,610
Co-op funds liability	1,060,683		805,351
Payroll liabilities ($0.7 million and $0.6 million attributable to VIEs as of December 31, 2023 and 2022)	3,485,744		2,030,510
Operating lease liability, current portion	3,756,328		5,295,830
Finance lease liability, current portion	25,491		24,433
Deferred franchise fee revenue, current portion	2,516,554		2,468,601
Deferred revenue from company clinics ($1.6 million and $4.7 million attributable to VIEs as of December 31, 2023 and 2022)	4,463,747		7,471,549
Upfront regional developer fees, current portion	362,326		487,250
Other current liabilities	483,249		597,294
Liabilities to be disposed of ($3.6 million attributable to VIEs as of December 31, 2023)	13,831,863		—
Total current liabilities	33,574,082		23,217,017
Operating lease liability, net of current portion	10,914,997		18,672,719
Finance lease liability, net of current portion	38,016		63,507
Debt under the Credit Agreement	2,000,000		2,000,000
Deferred franchise fee revenue, net of current portion	13,597,325		14,161,134
Upfront regional developer fees, net of current portion	1,019,316		1,500,278
Other liabilities	1,235,241		1,287,879
Total liabilities	62,378,977		60,902,534
Commitments and contingencies (note 10)
Stockholders' equity:
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of December 31, 2023 and 2022	—		—
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,783,757 shares issued and 14,751,633 shares outstanding as of December 31, 2023 and 14,560,353 shares issued and 14,528,487 outstanding as of December 31, 2022	14,783		14,560
Additional paid-in capital	47,498,151		45,558,305
Treasury stock 32,124 shares as of December 31, 2023 and 31,866 shares as of December 31, 2022, at cost	(860,475)		(856,642)
Accumulated deficit	(21,905,577)		(12,153,380)


Total The Joint Corp. stockholders' equity	24,746,882		32,562,843
Non-controlling Interest	25,000		25,000
Total equity	24,771,882		32,587,843
Total liabilities and stockholders' equity	$	87,150,859	$	93,490,377


	Common Stock			Additional Paid In Capital		Treasury Stock			Accumulated Deficit
	Shares	Amount				Shares	Amount				Total The Joint Corp. stockholder's equity		Non-controlling Interest		Total
Balances, December 31, 2021	14,451,355	$	14,450	$	43,900,157	31,643	$	(850,838)	$	(12,780,085)	$	30,283,684	$	25,000	$	30,308,684
Stock-based compensation expense	—	—		1,273,989		—	—		—		1,273,989		—		1,273,989
Issuance of restricted stock	65,618	66		(66)		—	—		—		—		—		—
Exercise of stock options	43,380	44		384,225		—	—		—		384,269		—		384,269
Purchases of treasury stock under employee stock plans	—	—		—		223	(5,804)		—		(5,804)		—		(5,804)
Net income	—	—		—		—	—		626,705		626,705		—		626,705
Balances, December 31, 2022	14,560,353	14,560		45,558,305		31,866	(856,642)		(12,153,380)		32,562,843		25,000		32,587,843
Stock-based compensation expense				1,737,682							1,737,682		—		1,737,682
Issuance of restricted stock	197,781	198		(198)							—		—		—
Exercise of stock options	25,623	25		202,362							202,387		—		202,387
Purchases of treasury stock under employee stock plans						258	(3,833)				(3,833)		—		(3,833)
Net Loss									(9,752,197)		(9,752,197)		—		(9,752,197)
Balances, Balances, December 31, 2023	14,783,757	$	14,783	$	47,498,151	32,124	$	(860,475)	$	(21,905,577)	$	24,746,882	$	25,000	$	24,771,882


	December 31, 2022		December 31, 2021
ASSETS	(As Restated)		(As Restated)
Current assets:
Cash and cash equivalents	$	9,745,066	$	19,526,119
Restricted cash	805,351		386,219
Accounts receivable	3,911,272		3,700,810
Deferred franchise and regional development costs, current portion	1,054,060		994,587
Prepaid expenses and other current assets	2,098,359		2,281,765
Total current assets	17,614,108		26,889,500
Property and equipment, net	17,475,152		14,388,946
Operating lease right-of-use asset	20,587,199		18,425,914
Deferred franchise and regional development costs, net of current portion	5,707,678		5,505,420
Intangible assets, net	10,928,295		4,712,763
Goodwill	8,493,407		5,085,203
Deferred tax assets	11,928,152		11,486,799
Deposits and other assets	756,386		567,202
Total assets	$	93,490,377	$	87,061,747

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,966,589	$	1,705,568
Accrued expenses	1,069,610		1,809,460
Co-op funds liability	805,351		386,219
Payroll liabilities ($0.6 million and $0.4 million attributable to VIEs as of December 31, 2022 and 2021)	2,030,510		3,906,317
Operating lease liability, current portion	5,295,830		4,613,843
Finance lease liability, current portion	24,433		49,855
Deferred franchise fee revenue, current portion	2,468,601		2,421,721
Deferred revenue from company clinics ($4.7 million and $3.5 million attributable to VIEs as of December 31, 2022 and 2021)	7,471,549		5,235,745
Upfront regional developer fees, current portion	487,250		770,171
Other current liabilities	597,294		539,500
Total current liabilities	23,217,017		21,438,399
Operating lease liability, net of current portion	18,672,719		16,872,093
Finance lease liability, net of current portion	63,507		87,939
Debt under the Credit Agreement	2,000,000		2,000,000
Deferred franchise fee revenue, net of current portion	14,161,134		12,953,430
Upfront regional developer fees, net of current portion	1,500,278		2,505,491
Other liabilities	1,287,879		895,711
Total liabilities	60,902,534		56,753,063
Commitments and contingencies (note 11)
Stockholders' equity:
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of December 31, 2022 and 2021	—		—
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,560,353 shares issued and 14,528,487 shares outstanding as of December 31, 2022 and 14,451,355 shares issued and 14,419,712 outstanding as of December 31, 2021	14,560		14,450
Additional paid-in capital	45,558,305		43,900,157
Treasury stock 31,866 shares as of December 31, 2022 and 31,643 shares as of December 31, 2021, at cost	(856,642)		(850,838)
Accumulated deficit	(12,153,380)		(12,780,085)
Total The Joint Corp. stockholders' equity	32,562,843		30,283,684
Non-controlling Interest	25,000		25,000
Total equity	32,587,843		30,308,684
Total liabilities and stockholders' equity	$	93,490,377	$	87,061,747


	December 31, 2022				December 31, 2022
	As Previously Reported		Adjustments		As Restated
Intangible assets, net	$	12,867,529	$	(1,939,234)	$	10,928,295
Deferred tax assets	8,441,713		3,486,439		11,928,152
Total assets	91,943,172		1,547,205		93,490,377
Current liabilities:
Deferred franchise and regional development fee revenue, current portion	2,955,851		(2,955,851)		—
Deferred franchise fee revenue, current portion	—		2,468,601		2,468,601
Upfront regional developer fees, current portion	—		487,250		487,250
Other current liabilities	499,250		98,044		597,294
Total current liabilities	23,118,973		98,044		23,217,017
Deferred franchise and regional development fee revenue, net of current portion	15,661,412		(15,661,412)		—
Deferred franchise fee revenue, net of current portion	—		14,161,134		14,161,134
Upfront regional developer fees, net of current portion	—		1,500,278		1,500,278
Other liabilities	27,230		1,260,649		1,287,879
Total liabilities	59,543,841		1,358,693		60,902,534
Accumulated deficit	(12,341,892)		188,512		(12,153,380)
Total The Joint Corp. stockholders' equity	32,374,331		188,512		32,562,843
Total equity	32,399,331		188,512		32,587,843
Total liabilities and stockholders' equity	91,943,172		1,547,205		93,490,377


	Year Ended December 31, 2022				Year Ended December 31, 2022
	As Previously Reported		Adjustments		As Restated
Revenues:
Regional developer fees	$	659,099	$	(659,099)	$	—
Total revenues	101,911,409		(659,099)		101,252,310
Cost of revenues:
Franchise and regional developer cost of revenues	8,462,503		(659,099)		7,803,404
Total cost of revenues	9,830,162		(659,099)		9,171,063
Depreciation and amortization	7,643,980		(997,358)		6,646,622
General and administrative expenses	67,987,482		2,245,965		70,233,447
Total selling, general and administrative expenses	89,594,171		1,248,607		90,842,778
Income from operations	2,076,861		(1,248,607)		828,254
Income before income tax expense (benefit)	1,943,760		(1,248,607)		695,153
Income tax expense (benefit)	766,510		(698,062)		68,448
Net income	1,177,250		(550,545)		626,705
Earnings per share:
Basic earnings per share	$	0.08	$	(0.04)	$	0.04
Diluted earnings per share	$	0.08	$	(0.04)	$	0.04


	Year Ended December 31, 2021				Year Ended December 31, 2021
	As Previously Reported		Adjustments		As Restated
Revenues:
Regional developer fees	848,640		(848,640)		—
Total revenues	80,859,653		(848,640)		80,011,013
Cost of revenues:
Franchise and regional developer cost of revenues	7,408,125		(848,639)		6,559,486
Total cost of revenues	8,513,777		(848,639)		7,665,138
Depreciation and amortization	6,088,947		(2,167,060)		3,921,887
General and administrative expenses	49,453,305		1,393,513		50,846,818
Total selling, general and administrative expenses	66,966,668		(773,547)		66,193,121
Income from operations	5,352,419		773,546		6,125,965
Income before income tax expense (benefit)	5,282,541		773,546		6,056,087
Income tax (benefit)	(1,293,229)		(215,731)		(1,508,960)
Net income	6,575,770		989,277		7,565,047

Earnings per share:
Basic earnings per share	$	0.46	$	0.07	$	0.53
Diluted earnings per share	$	0.44	$	0.07	$	0.51


		December 31,
		2022		2021
		(As Restated)		(As Restated)
	December 31,						December 31,
	2023					2023		2022
Revenue recognized at a point in time	Revenue recognized at a point in time	$	94,520,246	$	73,968,060
Revenue recognized over time	Revenue recognized over time	$	6,732,064	$	6,042,953
Total Revenue	Total Revenue	$	101,252,310	$	80,011,013


	Deferred Revenue ~~short and long-term~~
	~~(As Restated)~~ from company clinics
Balance at December 31, ~~2020~~2021	$	~~12,655,508~~5,235,745
Revenue recognized that was included in the contract liability at the beginning of the year	~~(2,619,098)~~(4,553,086)
Net increase during the year ended December 31, ~~2021~~2022	~~5,338,741~~6,788,890
Balance at December 31, 2022	$	7,471,549
Revenue recognized that was included in the contract liability at the beginning of the year	(6,455,934)
Net increase during the year ended December 31, 2023	3,448,132
Balance at December 31, 2023	$	4,463,747


	Deferred Revenue short and long-term
Balance at December 31, 2021	$	15,375,151
Revenue recognized that was included in the contract liability at the beginning of the year	(2,250,471)
Net increase during the year ended December 31, 2022	3,505,055
Balance at December 31, 2022	$	16,629,735
Revenue recognized that was included in the contract liability at the beginning of the year	(2,709,080)
Net increase during the year ended December 31, 2023	2,193,224
Balance at December 31, 2023	$	16,113,879


	Deferred Franchise and Development Costs short and long-term
Balance at December 31, ~~2020~~	$	~~5,238,307~~
~~Recognized as cost of revenue during the year~~	~~(1,099,892)~~
~~Net increase during the year ended December 31, 2021~~	~~2,361,592~~
~~Balance at December 31,~~ 2021	$	6,500,007
Recognized as cost of revenue during the year	(938,736)
Net increase during the year ended December 31, 2022	1,200,467
Balance at December 31, 2022	$	6,761,738
Recognized as cost of revenue during the year	(1,135,592)
Net increase during the year ended December 31, 2023	625,220
Balance at December 31, 2023	$	6,251,366


	Amount
Contract liabilities expected to be recognized in	(As Restated)
2023	$	2,468,601
2024	2,354,521
2025	2,208,462
2026	2,112,532
2027	2,033,031
Thereafter	5,452,588
Total	$	16,629,735


Property and equipment	$	313,995
Operating lease right-of-use asset	317,662
Intangible assets	1,004,513
Total assets acquired	1,636,170
Deferred revenue	(158,365)
Operating lease liability - current portion	(118,081)
Operating lease liability - net of current portion	(199,957)
Net purchase consideration	$	1,159,767


Property and equipment	$	241,511
Operating lease right-of-use asset	912,937
Intangible assets	3,689,100
Total assets acquired	4,843,548
Goodwill	3,408,205
Deferred revenue	(455,317)
Operating lease liability - current portion	(128,516)
Operating lease liability - net of current portion	(784,722)
Net purchase consideration	$	6,883,198


Property and equipment	$	198,236
Operating lease right-of-use asset	521,222
Intangible assets	3,544,456
Total assets acquired	4,263,914
Deferred revenue	(326,332)
Operating lease liability - current portion	(146,255)
Operating lease liability - net of current portion	(367,536)
Net purchase consideration	$	3,423,791


Property and equipment	$	677,518
Tenant improvement allowance	55,790
Operating lease right-of-use asset	1,520,353
Intangible assets	1,480,359
Total assets acquired	3,734,020
Deferred revenue	(215,555)
Operating lease liability - current portion	(200,877)
Operating lease liability - net of current portion	(1,422,461)
Net purchase consideration	$	1,895,127


	Year Ended December 31,
(Restated)	2022		2021
Revenues, net	$	107,022,047	$	87,280,590
Net (loss) income	171,315		6,424,015


			~~Year Ended~~ December 31,
			~~2022~~ 2023
~~Revenues, net~~Assets
Property and equipment, net	$	~~3,351,521~~4,887,220
~~Net income~~			~~947,551~~


~~Property and equipment~~				$	~~4,928~~
Operating lease right-of-use asset			~~651,197~~9,193,496
Intangible assets, net	3,351,430
Goodwill	~~1,579,500~~1,140,529
Valuation allowance	(657,620)
Total assets ~~acquired~~held for sale	$	~~2,235,625~~17,915,055

~~Goodwill~~Liabilities				~~459,599~~
~~Deferred revenue~~				~~(123,976)~~
Operating lease liability, - current ~~portion~~and non-current				~~(49,303)~~
~~Operating lease liability - net of current portion~~				~~(626,362)~~
~~Net purchase consideration~~				$	~~1,895,583~~10,209,382
Deferred revenue from company clinics	3,622,481
Total liabilities to be disposed of	$	13,831,863


~~Property and equipment~~	$	~~524,046~~
~~Operating lease right-of-use asset~~	~~865,813~~
~~Intangible assets~~	~~2,187,472~~
~~Total assets acquired~~	~~3,577,331~~
~~Deferred revenue~~	~~(244,998)~~
~~Operating lease liability - current portion~~	~~(185,181)~~
~~Operating lease liability - net of current portion~~	~~(637,565)~~
~~Net purchase consideration~~	$	~~2,509,587~~


~~Property and equipment~~	$	~~252,631~~
~~Operating lease right-of-use asset~~	~~1,341,482~~
~~Intangible assets~~	~~1,092,341~~
~~Total assets acquired~~	~~2,686,454~~
~~Deferred revenue~~	~~(144,383)~~
~~Operating lease liability - current portion~~	~~(135,784)~~
~~Operating lease liability - net of current portion~~	~~(1,180,861)~~
~~Net purchase consideration~~	$	~~1,225,426~~


		December 31, 2022
		(As Restated)
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
	December 31, 2023									December 31, 2023
	Gross Carrying Amount							Gross Carrying Amount	Accumulated Amortization		Net Carrying Value
Intangible assets subject to amortization:	Intangible assets subject to amortization:
Reacquired franchise rights
Reacquired franchise rights
Reacquired franchise rights	Reacquired franchise rights	$	12,881,894	$	4,755,286	$	8,126,608
Customer relationships	Customer relationships	4,330,365		2,352,500		1,977,865
Assembled workforce	Assembled workforce	959,837		136,015		823,822
		$	18,172,096	$	7,243,801	$	10,928,295
	$


	December 31, 2021
	(As Restated)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Intangible assets subject to amortization:
Reacquired franchise rights	$	6,795,865	$	3,153,037	$	3,642,828
Customer relationships	2,603,006		1,587,443		1,015,563
Assembled workforce	59,311		4,939		54,372
	$	9,458,182	$	4,745,419	$	4,712,763


			Amortization (Years)
Reacquired franchise rights			~~5.8~~5.9
Customer relationships			2.6
Assembled workforce			2.0
All intangible assets			~~4.8~~4.9